Method and system for a deferred variable annuity with flexible lifetime benefit payments

ABSTRACT

A computer implemented data processing system and method administers a deferred variable annuity contract during the accumulation phase for a relevant life. The annuity contract has a payment base value, a contract value, and benefit payments. The system predetermines a series of payout periods, wherein the number of years of each payout period is greater than one year, for predetermining a maximum total withdrawal percent for each payout period. The product of the maximum total withdrawal percent and the payment base value is a maximum benefit payment amount that may be withdrawn during the payout period without reducing the payment base value.

CROSS-REFERENCE TO RELATED APPLICATIONS

This application claims priority to application Ser. No. 60/961,793,filed Jul. 24, 2007.

BACKGROUND OF THE INVENTION

1. Field of the Invention

The present invention relates to a method and system for administering adeferred annuity with flexible lifetime benefit payments; and moreparticularly, to a data processing method for administering a deferredannuity contract during the accumulation phase for a relevant life, theannuity contract having a payment base value, a contract value, andyearly lifetime benefit payments.

2. Description of the Prior Art

An immediate annuity is typically used to provide an income streamwithin a predetermined length of time from the date the premium isreceived. The amount of income can be either fixed or variable in natureand typically these products do not provide an account value. A deferredannuity is typically used to provide accumulation and, potentially, afuture stream of annuity income. The deferred annuity comprises anaccumulation period during which the account value will vary with theunderlying investments and an annuitization period where the clientpurchases an immediate annuity with the account value available.Deferred and immediate annuities typically provide guaranteed income forlife which transfers some portion or all of the risk of outliving one'saccumulated assets to the insurer.

One basis for distinguishing commonly available deferred annuities iswhether the annuity is classified as a “fixed annuity” or a “variableannuity”. In a fixed annuity, the insurer guarantees a fixed rate ofinterest applicable to each annuity deposit. Therefore, a fixed annuityis desirable for those seeking a “safe” investment. The guaranteedinterest rate may apply for a specified period of time, often one yearor more. Often, a rate guaranteed for more than one year is called a“multi-year guarantee”. The rate credited on a fixed annuity is resetperiodically, moving in an amount and a direction that correlate theyields available on fixed-income investments available to the insurer.

With a variable annuity, the annuity contract owner bears the investmentrisk. The relevant life typically has a choice of funds in which he/shecan direct where the annuity deposits will be invested. The variousfunds or sub-accounts may include stocks, bonds, money marketinstruments, mutual funds, and the like.

Variable annuity contracts typically provide a death benefit. Oftentimesduring the accumulation period this death benefit is related to thecontract value. That is, if the sub-accounts backing the contract valuehave performed poorly, then the death benefit may be reduced to aninsignificant amount. After annuitization, the death benefit can be afunction of the remaining payments of the annuity at the time of therelevant life's death. Further, if the annuity contract does not providea guarantee (discussed below), the contract will terminate when thecontract value goes to zero or some other amount specified in thecontract or rider.

Annuity contracts may also provide guarantees in several differentvariations. A Guaranteed Minimum Death Benefit (GMDB) is a guaranteethat provides a minimum benefit at the death of the relevant liferegardless of the performance of the underlying investments. AGuaranteed Minimum Income Benefit (GMIB) is a guarantee that willprovide a specified income amount at the time the contract isannuitized. The income payment will be dependent on previously stateddetails set out in the contract. A Guaranteed Minimum AccumulationBenefit (GMAB) is a benefit that guarantees a specified contract valueat a certain date in the future, even if actual investment performanceof the contract is less than the guaranteed amount. A Guaranteed MinimumWithdrawal Benefit (GMWB) is a guarantee of income for a specifiedperiod of time, and in some versions, the income stream is guaranteedfor life without requiring annuitization as in the guaranteed minimumincome benefit. However, this guarantee will automatically annuitize thecontract if the contract value is reduced to zero or some other amountspecified in the contract or rider.

Most deferred variable annuity products in the prior art typicallydetermine the amount of the yearly lifetime benefit payments, if any, tobe a predetermined percentage (withdrawal percent) of a withdrawal base.The withdrawal base amount is typically set at the time of the firstlifetime benefit payment and is fixed for the remainder of the term ofthe annuity product. Further, the withdrawal percent is typically fixedafter the first lifetime benefit payment is requested, or alternativelythe withdrawal percent varies slightly for the remainder of the term ofthe annuity product.

Many financial products and systems have been disclosed. These include:information relevant to financial products having a future benefitconditioned on life expectancies of both an insured and a beneficiary; apost employment qualified health care benefit plan funded during acovered person's working years to covered persons under the plan, aretirement plan funded with a variable life insurance policy and/or avariable annuity policy; a benefit plan providing systematic withdrawalpayments during a liquidity period and annuity payments when thesystematic withdrawal payments cease, and financial instrumentsproviding a guaranteed growth rate and a guarantee of lifetime payments.

Each one of these prior art references suffers from at least thefollowing disadvantage(s): the relevant life does not have theflexibility to be able to select how to spread a total withdrawalpercent over a payout period that is greater than one year, in the formof yearly lifetime benefit payments.

Accordingly, there remains a need in the art for a data processingmethod for administering a deferred annuity contract for a relevant lifewherein the annuity contract allows the relevant life enhancedflexibility for selecting a particular withdrawal percent for each givenyear during the contract. Further, needed in the art is a deferredannuity contract having a series of payout periods, wherein the numberof years of each payout period is greater than one year and wherein eachpayout period has a predetermined total withdrawal percent; and whereinthe amount of the lifetime benefit payment withdrawal for each givenyear within a given payout period is determined by receiving aninstruction from the relevant life that provides a withdrawal percent touse for each given year, wherein the sum of the withdrawal percents fromeach given year within the payout period is equal to or less than thepredetermined total withdrawal percent that is allowed for the givenpayout period.

SUMMARY OF THE INVENTION

The present invention provides a data processing method foradministering a deferred annuity contract during the accumulation phasewherein the annuity contract has a payment base, a contract value, andyearly lifetime benefit payments comprising the steps of: (i) selectingthe number of years of a first payout period for the lifetime benefitpayments, wherein the number of years of the first, payout period isgreater than one year; (ii) selecting a maximum total withdrawal percentfor the first payout period; (iii) if requested by the relevant life,periodically calculating a yearly lifetime benefit payment withdrawalfor the relevant life which decreases the contract value. Wherein theamounts of the lifetime benefit payment withdrawals for each given yearwithin the first payout period are determined by receiving aninstruction from the relevant life that provides a withdrawal percent touse for each given year. Wherein the withdrawal percents provided by therelevant life's instruction may differ for each given year within thefirst payout period. Wherein the sum of the withdrawal percents fromeach given year within the first payout period, as provided by therelevant life's instruction, is equal to or less than the predeterminedmaximum total withdrawal percent that is allowed for the first payoutperiod; and (iv) repeating the above method steps at the conclusion ofeach payout period. In prior art annuity products, the amount of thelifetime benefit payments, if any, is determined to be a predeterminedpercentage of a withdrawal base. This predetermined percentage typicallyis substantially fixed for the remainder of the contract, oralternatively, increases slightly for the remainder of the term as therelevant life ages.

The data processing method and system of the invention maintains orguarantees an annuity with yearly lifetime benefit payments. The dataprocessing method administers an annuity contract having a payment base,a contract value, together with lifetime benefit payments.

Generally stated, the method of the invention predetermines the numberof years of a given payout period for the lifetime benefit payments,wherein the number of years of the given payout period is greater thanone year. The method predetermines a maximum total withdrawal percentfor the given payout period. If requested by the relevant life, themethod periodically calculates a yearly lifetime benefit payment for therelevant life which decreases the contract value. The amount of thelifetime benefit payment withdrawal for each given year within the givenpayout period is determined by receiving an instruction from therelevant life that provides a withdrawal percent to use for each givenyear, wherein the sum of the withdrawal percents from each given yearwithin the given payout period is equal to or less than thepredetermined maximum total withdrawal percent that is allowed for thefirst payout period.

In an alternative embodiment, the method of the invention determines apayment base for the annuity product that is a function of the previouspremium payments and withdrawals by the relevant life, and could includeinvestment performance on an annual or other basis (daily, monthly,etc.) and, if requested by the relevant life, the method periodicallyaccepts premium payments from the relevant life which increase thepayment base and the contract value.

In one embodiment, each of the yearly lifetime benefit paymentwithdrawals during a given payout period are determined by the followingformulas:LBP withdrawal(year 1)=(the Payment Base)×(the year 1 WithdrawalPercent),

-   -   wherein (the year 1 Withdrawal Percent) is selected by the        relevant life;        LBP withdrawal(year 2)=(the Payment Base)×(the year 2 Withdrawal        Percent),    -   wherein (the year 2 Withdrawal Percent) is selected by the        relevant life;        LBP withdrawal(year X)=(the Payment Base)×(the year X Withdrawal        Percent),    -   wherein (the year X Withdrawal Percent) is selected by the        relevant life;    -   wherein X=(the number of years of the given payout period);    -   wherein [(the year 1 Withdrawal Percent)+(the year 2 Withdrawal        Percent)+(the year X Withdrawal Percent)] is equal to or less        then (the maximum total Withdrawal Percent for the given payout        period),    -   wherein (the maximum total Withdrawal Percent for the given        payout period) is predetermined by the company issuing the        annuity product.

In another embodiment, the method predetermines a yearly withdrawalpercent chart that provides a withdrawal percent for each year of therelevant life's future age, and wherein (the maximum total withdrawalpercent for the given payout period)=(the predetermined yearlywithdrawal percent at the first year of the given payout periodaccording to the withdrawal percent chart)×(the number of years of thegiven payout period).

It is important to note that, in alternative embodiments, the maximumtotal withdrawal percent for a given payout period is not established byany specific formula, but rather is predetermined and is an arbitrarynumber. For example, the maximum total withdrawal percent could bepredetermined to be 15% over a given three year payout period.

Preferably, the annuity contract of the data processing method is adeferred variable annuity and further includes sub-accounts whose marketperformance can cause the contract value to increase or decrease. Inother aspects of the invention, the annuity contract may be selectedfrom the group of fixed, combination variable/fixed, and equity indexedannuities.

In addition, the account may be subject to M, E & A, 12 b-1 and fundlevel charges. These charges may or may not be assessed against thecontract value.

The guaranteed death benefit is paid to the beneficiary only if therelevant life dies during the accumulation phase. However, a guaranteeddeath benefit may also be payable during annuitization as well. Theyearly lifetime benefit payment may be paid once yearly or periodicallythroughout the year; however, there is a maximum lifetime benefitpayment for any given payout period. In prior art annuity products, therelevant life receives lifetime benefit payments that are based on afixed withdrawal percent, or a withdrawal percent that slightlyincreases over time. On the other hand, the present method allows therelevant life to have the opportunity to request a lifetime benefitpayment during each period that is based on a withdrawal percent that isselected by the relevant life. Therefore, the lifetime benefit paymentis not based on a fixed percentage of a withdrawal base amount, and thewithdrawal percent may fluctuate depending on the preferences and needsof the relevant life. The maximum total withdrawal percent for any givenpayout period may not be exceeded however. Accordingly, the relevantlife has the opportunity to request a yearly lifetime benefit paymentthat has the potential to afford a greater flexibility in value then thelifetime benefit payments of prior art annuity contracts.

In one aspect, the value of the annuity payments, if necessary, equalsthe value of the most recent guaranteed lifetime benefit payment. Inother aspects, excess withdrawals, required minimum distributions orstep-ups could cause the value of the annuity payments or guaranteedlifetime benefit payments to change.

In another aspect of the invention, the present invention comprises adeferred annuity contract comprising: (i) means for determining a seriesof payout periods, wherein the number of years of each payout period isgreater than one year; (ii) means for determining a maximum totalwithdrawal percent for each payout period; and (iii) means forcalculating the amount of the lifetime benefit payment withdrawal foreach given year within a given payout period by receiving an instructionfrom the relevant life that provides a withdrawal percent to use foreach given year. Wherein the sum of the withdrawal percents from eachgiven year within the payout period is equal to or less than thepredetermined maximum total withdrawal percent that is allowed for thegiven payout period.

In another aspect of the invention, the present invention comprises asystem for administering a deferred variable annuity contract during theaccumulation phase, the annuity contract having a payment base value, acontract value, and lifetime benefit payments, comprising: a storagedevice; a processor coupled to the storage device, the storage devicestoring instructions that are utilized by the processor, theinstructions comprising: (i) an instruction for receiving informationfrom a relevant life in order to establish the deferred variable annuitycontract; (ii) an instruction for receiving lifetime benefit paymentwithdrawal requests from the relevant life; (iii) an instruction topredetermine a series of payout periods, wherein the number of years ofeach payout period is greater than one year; (iv) an instruction topredetermine a maximum total withdrawal percent for each payout period;(v) an instruction to calculate the amount of the lifetime benefitpayment withdrawal for each given year within a given payout period byreceiving an instruction from the relevant life that provides awithdrawal percent to use for each given year. Wherein the sum of thewithdrawal percents from each given year within the payout period isequal to or less than the predetermined maximum total withdrawal percentthat is allowed for the given payout period.

The present invention solves several of the problems associated withconventional administration of annuity contracts. Determination of thelifetime benefit payment is accomplished via an improved formula thatprovides the potential to afford a greater flexibility for the value ofeach yearly lifetime benefit payment than prior art annuity contracts.The relevant life is afforded increased security by the enhancedflexibility afforded in selecting the withdrawal percent for the yearlylifetime benefit payments, according to the present invention.

Other objects, features, and characteristics of the present invention,as well as the methods of operation and functions of the relatedelements of the structure, and the combination of parts and economies ofmanufacture, will become more apparent upon consideration of thefollowing detailed description with reference to the accompanyingdrawings, all of which form a part of this specification.

BRIEF DESCRIPTION OF DRAWINGS

A further understanding of the present invention can be obtained byreference to a preferred embodiment set forth in the illustrations ofthe accompanying drawings. Although the illustrated embodiment is merelyexemplary of systems for carrying out the present invention, both theorganization and method of operation of the invention, in general,together with further objectives and advantages thereof, may be moreeasily understood by reference to the drawings and the followingdescription. The drawings are not intended to limit the scope of thisinvention, which is set forth with particularity in the claims asappended or as subsequently amended, but merely to clarify and exemplifythe invention.

For a more complete understanding of the present invention, reference isnow made to the following drawings in which:

FIG. 1 is a flow chart illustrating the manner in which a new annuitycontract application is processed;

FIG. 2 is a flow chart that illustrates in more detail the manner inwhich an annuity contract is established;

FIG. 3 is a flow chart that illustrates in more detail the manner inwhich an account value is set up;

FIG. 4 is a flow chart that illustrates in more detail the manner inwhich customer communication is established;

FIG. 5 is a flow chart illustrating the appropriate steps after awithdrawal is requested;

FIG. 6 is a flow chart illustrating an embodiment of the presentinvention comprising a data processing method for administering anannuity contract for a relevant life;

FIG. 7 is a flow chart illustrating an embodiment of the presentinvention comprising a data processing method for administering adeferred annuity product for a relevant life;

FIG. 8 is a flow chart illustrating an embodiment of the presentinvention comprising a data processing method for administering adeferred annuity product for a relevant life; and

FIG. 9 is a diagram illustrating the system on which the methods of thepresent invention may be implemented in accordance with an embodiment ofthe present invention.

FIG. 10 depicts a table illustrating lifetime benefit payments issued tothe relevant life for annuities associated with various ages inaccordance with an embodiment of the present invention; and

FIG. 11 depicts a graph illustrating lifetime benefit payments issued tothe relevant life for annuities associated with various ages inaccordance with an embodiment of the present invention.

DESCRIPTION OF THE PREFERRED EMBODIMENTS

As required, a detailed illustrative embodiment of the present inventionis disclosed herein. However, techniques, systems and operatingstructures in accordance with the present invention may be embodied in awide variety of forms and modes, some of which may be quite differentfrom those in the disclosed embodiment. Consequently, the specificstructural and functional details disclosed herein are merelyrepresentative, yet in that regard, they are deemed to afford the bestembodiment for purposes of disclosure and to provide a basis for theclaims herein, which define the scope of the present invention. They aredeemed to afford the best embodiment for purposes of disclosure; butshould not be construed as limiting the scope of the invention. Thefollowing presents a detailed description of the preferred embodiment ofthe present invention.

The present invention comprises a data processing method foradministering a deferred annuity contract having a payment base, acontract value, and yearly lifetime benefit payments. As used herein,the term “annuity contract” means a set of rules and other data that arereflected in a computer processing system for operations of the annuityproduct. In the present invention, the lifetime benefit is not a fixedpercentage of a withdrawal base. Instead, the yearly lifetime benefitpayment available for each period is selected by the relevant life byselecting the withdrawal percent for the given year. The present dataprocessing method is preferably in the form of a rider to an annuitycontract. The contract may be variable or fixed. In another aspect ofthe invention, the present data processing method is not in the form ofa rider, but is a part of the base contract.

In exchange for paying higher fees, the relevant life receives severaladvantages by selecting the method and system of the present inventionwhich provides a flexible lifetime benefit payment available for eachperiod that is selected by the relevant life as described herein. Theseadvantages include the following: The relevant life will have theopportunity to request yearly lifetime benefit payment amounts based onthe relevant life's preferences. Therefore, the lifetime benefit paymentis not based on a substantially fixed percentage of a withdrawal baseamount. Instead, the withdrawal percent that is selected by the relevantlife for each lifetime benefit payment amount may fluctuate depending onthe preferences of the relevant life and according to the limitationsdescribed herein. Accordingly, the relevant life has the opportunity torequest a lifetime benefit payment in any given year that is much higherthan a typical lifetime benefit payment. This type of flexibility is notprovided by prior art annuity products.

Further, the relevant life has the ability to skip lifetime benefitpayments in any given year without surrendering the withdrawal amount.Similarly, the relevant life has the ability to take an increasedlifetime benefit withdrawal in any given year without damaging the corestructure of the product and without decreasing the payment base(provided the increased lifetime benefit withdrawal adheres to thelimitations provided herein). The relevant life is provided withenhanced flexibility in deciding the amount of the lifetime benefitpayments for each year. Such flexibility allows the relevant life toadjust the amount of the lifetime benefit payments according to changingneeds—whether foreseen or unforeseen.

The relevant life achieves flexibility to take withdrawals in acustomized manner. Therefore, the relevant life has the ability to meetunplanned expenses by taking larger withdrawals without negativelyimpacting the benefits of the contract. The present invention furtherprevents the necessity to lock in a set future stream of income beforethe relevant life knows his/her future needs. The present inventionprovides the ability to take withdrawals based on a period of timegreater than one year, meaning the withdrawals year after year canchange as long as the total withdrawals over a period of years stayswithin the constraints of the contract. The relevant life has theability to “advance” withdrawals by taking more in the first year,taking from future years, without negatively impacting the benefits ofthe contract.

The present invention comprises a data processing system and method foradministering a deferred annuity contract during the accumulation phasefor a relevant life, the annuity contract having a payment base, acontract value and yearly lifetime benefit payments, comprising thesteps of: (i) selecting the number of years of a first payout period forthe lifetime benefit payments, wherein the number of years of the firstpayout period is greater than one year; (ii) selecting a maximum totalwithdrawal percent for the first payout period; (iii) if requested bythe relevant life, periodically calculating a yearly lifetime benefitpayment withdrawal for the relevant life which decreases the contractvalue. Wherein the amounts of the lifetime benefit payment withdrawalsfor each given year within the first payout period are determined byreceiving an instruction from the relevant life that provides awithdrawal percent to use for each given year, and wherein thewithdrawal percents provided by the relevant life's instruction maydiffer for each given year within the first payout period. Additionally,the sum of the withdrawal percents from each given year within the firstpayout period, as provided by the relevant life's instruction, is equalto or less than the predetermined maximum total withdrawal percent thatis allowed for the first payout period; and (iv) repeating the abovemethod steps at the conclusion of each payout period.

In another aspect, the present invention comprises a system foradministering a deferred variable annuity contract during theaccumulation phase, the annuity contract having a payment base value, acontract value, and lifetime benefit payments, comprising: a storagedevice; a processor coupled to the storage device, the storage devicestoring instructions that are utilized by the processor, theinstructions comprising: (i) receiving information from a relevant lifein order to establish the deferred variable annuity contract; (ii)receiving lifetime benefit payment withdrawal requests from the relevantlife; (iii) predetermining a series of payout periods, wherein thenumber of years of each payout period is greater than one year; (iv)predetermining a maximum total withdrawal percent for each payoutperiod; (v) calculating the amount of the lifetime benefit paymentwithdrawal for each given year within a given payout period by receivingan instruction from the relevant life that provides a withdrawal percentto use for each given year. Wherein the sum of the withdrawal percentsfrom each given year within the payout period is equal to or less thanthe predetermined maximum total withdrawal percent that is allowed forthe given payout period.

It should be understood that as used herein the term “periodically”includes method steps that in certain aspects may only be performedonce. In other aspects, such “periodically” performed method steps maybe performed more than once as described herein.

The following definitions are given hereunder to better understand termsused in the specification.

“Relevant Life” or “Covered Life”: The term relevant life or coveredlife is the governing life for determination of the living benefitsprovided under this illustrative embodiment. Covered life (or relevantlife) may refer to any one or more of the following: an owner, jointowner, annuitant, joint annuitant, co-owner, co-annuitant orbeneficiary.“Withdrawal Base”: The withdrawal base is the amount used in oneembodiment of the present invention to determine the lifetime benefitpayment. Preferably, the withdrawal base may be equal to the amount ofthe original premium, the payment base value, the contract value, or thegreater of the payment base value and the contract value.“Payment Base”: The payment base (PB) (or more accurately the paymentbase value) is the amount used in one embodiment of the presentinvention to determine the lifetime benefit payment and the ridercharge. In one embodiment of the present invention, the initial paymentbase value equals the initial premium.“Premium”: 100% of the dollar amount of the initial or subsequentpremium payments deposited into the contract before application of anysales charges or payment enhancements.“Withdrawal Request”: A request made by the relevant life to withdrawfunds during the “accumulation phase” of the contract. One type ofwithdrawal is a lifetime benefit payment. Any withdrawal that is inexcess of the lifetime benefit payment may: (i) decrease the contractvalue below the minimum contract value; (ii) decrease the payment basevalue; and (iii) decrease the guaranteed death benefit.“Lifetime Benefit Payment”: A benefit payment that is available untilthe death of the relevant life. The lifetime benefit payment may be paidyearly in one embodiment. The total lifetime benefit payment for theyear may also be distributed monthly, quarterly or any other definedperiod. Preferably, the lifetime benefit payment is only available ifthe covered life age is 60 (or other predetermined age) or older.Preferably, if the relevant life is age 59 (or other predetermined age)or younger, the LBP is equal to zero. Other age restrictions can also beutilized for the lifetime benefit payment. In one embodiment, thelifetime benefit payment is determined by one of the following formulas:LBP withdrawal(year 1)=(the Payment Base)×(the year 1 WithdrawalPercent),

-   -   wherein (the year 1 Withdrawal Percent) is selected by the        relevant life;        LBP withdrawal(year 2)=(the Payment Base)×(the year 2 Withdrawal        Percent),    -   wherein (the year 2 Withdrawal Percent) is selected by the        relevant life;        LBP withdrawal(year X)=(the Payment Base)×(the year X Withdrawal        Percent),    -   wherein (the year X Withdrawal Percent) is selected by the        relevant life;    -   wherein X=(the number of years of the given payout period);    -   wherein [(the year 1 Withdrawal Percent)+(the year 2 Withdrawal        Percent)+(the year X Withdrawal Percent)] is equal to or less        then (the maximum total Withdrawal Percent for the given payout        period), and    -   wherein (the total Withdrawal Percent for the given payout        period) is predetermined by the company issuing the annuity        product.

It should be understood that in other embodiments of the presentinvention, other formulas may be utilized for determining the lifetimebenefit payment. It is important to note that, in alternativeembodiments, the maximum total withdrawal percent for a given payoutperiod is not established by any specific formula, but rather ispredetermined and is an arbitrary number.

“Contract Value”: The contract value (CV) is a numerical measure of therelative worth of a variable annuity product during the accumulationphase. The contract value is determined by adding the amount of purchasepayments made during the accumulation phase, deducting management fees,deducting contract fees, deducting optional rider-fees and surrendersmade by the owner, and adjusting for the relative increase (or decrease)of the investment option(s) chosen by the owner. It should be understoodthat in other embodiments of the present invention, other formulas maybe utilized for determining the contract value.“Sub-account”: Variable account investments within the variable annuitycontract, such as mutual funds, stocks and bonds.“Withdrawal”: Also known as a “surrender”, a relevant life may withdrawup to the contract value at any time.“Death Benefit”: The death benefit provision guarantees that upon thedeath of the relevant life a death benefit (DB) is paid to a beneficiarynamed in the contract that is equal to the greater of the guaranteeddeath benefit or the contract value as of the date the annuity companyreceives due proof of death. It should be understood that in otherembodiments of the present invention, other formulas may be utilized fordetermining the guaranteed death benefit.“Benefit Amount”: In one embodiment of the present invention, thebenefit amount is used to calculate that amount of the death benefit.Preferably, the benefit amount is equal to the premium payments minusany lifetime benefit payments or withdrawals.“AMF”: Annual Maintenance Fee“Annuity Commencement Date”: The annuity commencement date (ACD) is thedate upon which the contract enters the “annuitization phase”.“Withdrawal Percent”: In one embodiment of the present invention, thewithdrawal percent (WP) is used to determine the amount of the lifetimebenefit payment. It should be understood that in other embodiments ofthe present invention, other formulas may be utilized for determiningthe lifetime benefit payment.“PB increase”: Payment Base increase.“Step-Up”: An increase to the payment base value that is available ifthe contract value increases because of favorable performance of theunderlying investments. Preferably, the step-up is guaranteed at apredetermined percentage.“Partial Surrender”: Partial surrender means the gross amount of thepartial surrender and will include any applicable contingent deferredsales charges.“Covered Life Change”: Any contractual change before ACD which causes achange in the covered life will result in a reset in the benefitsprovided under the rider and allows the issuing company to impose thefund allocation restrictions.“Annuity Contract”: The term annuity contract means a set of rules andother data that are reflected in a computer processing system foroperations of the annuity product.“Issue Rules”: The issuance of a contract may be subject to establishedrequirements known as issue rules.

The following detailed illustrative embodiment(s) is presented toprovide a more complete understanding of the invention. The specifictechniques, systems, and operating structures set forth to illustratethe principles and practice of the invention may be embodied in a widevariety of sizes, shapes, forms and modes, some of which may be quitedifferent from those in the disclosed embodiment. Consequently, thespecific structural and functional details disclosed herein areexemplary. They are deemed to afford the best embodiment for purposes ofdisclosure; but should not be construed as limiting the scope of theinvention.

Covered Life in Single and Joint/Spousal Election(s)

The covered life, or relevant life, may have a single life election orjoint/spousal continuation election as described more fully herein.

Single Life Election

If a natural owner, the covered life is the owner and the joint owner(if any) on the rider effective date. If a non-natural owner, thecovered life is the annuitant on the rider effective date. Allage-contingent benefit provisions are based on the attained age of theoldest covered life.

Joint/Spousal Continuation Election

If a natural owner, the covered life is both spouses (as defined byFederal Law). All age-contingent benefit provisions are based on theattained age of the youngest covered life.

Issues Rules

The following issue rules are set forth to provide a more completeunderstanding of this illustrative embodiment of the present invention.It should be understood by those skilled in the art that these issuerules are set forth for illustrative purposes only and that other rulesmay be utilized. Accordingly, the issue rules set forth below should notbe construed as limiting the scope of the invention.

The issue rules may include a maximum issue age. In one embodiment, theriders are not available if any covered life or annuitant is age 81 (orother predetermined age) or greater on the rider effective date. Inanother embodiment, the riders are not available if any covered life orannuitant is age 76 (or other predetermined age) or greater on the Ridereffective date. The rider may be elected on contract issue orpost-issue.

Single Life Election: No additional requirements

Joint/Spousal Continuation Election: (This may also includeco-annuitants)

One of the following must apply:

-   -   If a natural owner purchases Joint/Spousal election, and adds a        spousal joint owner, then the owner can name anyone else as the        designated beneficiary, because by contract disposition, the        joint owner will receive the death benefit.    -   If a natural owner purchases joint/spousal election, and does        not add a joint owner, then the owner must name their spouse as        the designated beneficiary.    -   If a non-natural owner purchases joint/spousal election, then        the annuitant's spouse must be the designated beneficiary.    -   A joint owner who is not the owner's spouse is not allowed.        Calculation of the Withdrawal Percent (WP)

The Withdrawal Percent (WP) is used to determine the amount of thelifetime benefit payment. There are two types of withdrawal percents:(i) the predetermined withdrawal percent (shown below); and (ii) thewithdrawal percent elected by the relevant life during each given year.

The WP is determined at the later of; (i) the attained age of thecovered life on the most recent contract anniversary prior to the firstwithdrawal, or (ii) the contract anniversary immediately following thecovered life's 60^(th) birthday (or other predetermined age).

Single Life Election:

(Note: the following percentages and ages, if ages are in fact used, canvary)

5.0% for attained ages 60 to 64;

5.5% for attained ages 65 to 69;

6.0% for attained ages 70 to 74;

6.5% for attained ages 75 to 79; and

7.0% for attained ages 80 and above.

Joint/Spousal Continuation Election:

4.5% for attained ages 60 to 64;

5.0% for attained ages 65 to 69;

5.5% for attained ages 70 to 74;

6.0% for attained ages 75 to 79; and

6.5% for attained ages 80 and above.

Calculation of the Payment Base (PB)

The Payment Base (PB) (or more accurately payment base value) is theamount used to determine the lifetime benefit payment (LBP) and therider charge.

A total partial surrender amount in a contract year that exceeds the LBPby not more than $0.12 (the tolerance amount) will be deemed not morethan the LBP. This provision recognizes that owners may take the LBP ininstallments over the year, and the amount of installment may round theproportional distribution amount to the higher cent. Therefore, ownersintended to stay within the LBP may exceed it by only a few cents. Themaximum PB is $5,000,000.

If this rider is effective on the contract issue date, then the PBequals the X % of the initial premium. If this rider is effective afterthe contract issue date, then the PB equals 100% of the dollar amount ofthe contract value on the rider effective date, less any paymentenhancements received in the last twelve months.

When subsequent premium payments are received, the PB will be increasedby 100% of the dollar amount of the subsequent premium payment. Whenevera partial surrender is made prior to the contract anniversaryimmediately following the covered life's 60^(th) birthday (or otherpredetermined age), the payment base is reduced for an adjustmentdefined below.

“Threshold” definition: 5% single/4.5% joint/spousal multiplied by thegreater of the payment base or contract value at the beginning of thecontract year plus subsequent premiums prior to a partial surrender.

For cumulative partial surrenders during each contract year that areequal to or less than the threshold, the adjustment is equal to thedollar amount of the partial surrender.

For any partial surrender that first causes cumulative partialsurrenders during the contract year to exceed the threshold, theadjustment is the dollar amount of the partial surrender that does notexceed the threshold. For the portion of the withdrawal that exceeds thethreshold, the adjustment is a factor. The factor is as follows:1−(A/(B−C))

-   -   where    -   A=partial surrenders during the contract year in excess of the        threshold;    -   B=contract value immediately prior to the partial surrender; and    -   C=the threshold, less any prior partial surrenders during the        contract year. If C results in a negative number, C becomes        zero.

For partial surrenders during each contract year, where the sum of priorpartial surrenders are in excess of the threshold, the adjustment is afactor. The factor is applied to the payment base immediately before thesurrender. The factor is as follows:1−(A/B)

-   -   where    -   A=the amount of the partial surrender;    -   B=contract value immediately prior to the partial surrender.

Whenever a partial surrender is made on or after the contractanniversary immediately following the covered life's 60^(th) birthday(or other predetermined age), the PB will be equal to the amountdetermined as follows:

-   -   If the total partial surrenders since the most recent contract        anniversary are equal to or less than the current lifetime        benefit payment (LBP), the PB is not reduced by the amount of        the partial surrender.    -   If the total partial surrenders since most recent contract        anniversary are more than the current LBP, but all partial        surrenders were paid under the Automatic Income Required Minimum        Distribution (AI RMD), the PB is not reduced by the amount of        partial surrender.

For any partial surrender that first causes cumulative partialsurrenders during the contract year to exceed the current LBP and theRMD exception above does not apply the adjustment is a factor. Thefactor is as follows:1−(A/(B−C))

-   -   where    -   A=partial surrenders during the contract year in excess of the        LBP;    -   B=contract value immediately prior to the partial surrender; and    -   C=the LBP, less any prior partial surrenders during the contract        year. If C results in a negative number, C becomes zero.

For additional partial surrender(s) in a contract year, where the sum ofall prior partial surrenders exceed the current LBP, the PB will bereduced by applying a factor. The factor is as follows:1−(A/B)

-   -   where    -   A=the amount of the partial surrender;    -   B=contract value immediately prior to the partial surrender.        Benefit Increase Provision

In one embodiment, the withdrawal percent will be set at the attainedage of the first withdrawal and will not increase thereafter. In anotherembodiment, the benefit increase is facilitated through an increase ofthe payment base.

On every contract anniversary up to and including the contractanniversary immediately following the covered life's 80^(th) birthday(or other predetermined age), it will be determined as to whether anincrease in the PB is applicable. If an increase is applicable, the PBwill increase by the factor below, subject to a minimum of zero and amaximum of 10% (note: the percentage could change or it could be a fullstep up (no limit)):(contract value prior to rider charge taken on currentanniversary/maximum contract value)−1

-   -   where maximum contract value equals the greater of (A) or (B)        below:        -   (A) the contract value on the rider effective date, plus            premiums received after the rider effective date;        -   (B) the contract value on each subsequent contract            anniversary, excluding the current contract anniversary plus            premiums received after the contract anniversary date.            (Similar to MAV except that there is no adjustment for            withdrawals.)            The WP is locked in on the date of the first withdrawal.            Calculation of the Lifetime Benefit Payment

The LBP is available until the death of any covered life or until thewithdrawal benefit is revoked.

A total partial surrender amount in a contract year that exceeds the LBPby not more than $0.12 (the tolerance amount) will be deemed not morethan the LBP. This provision recognizes that owners may take the LBP ininstallments over the year, and the amount of installment may round theproportional distribution amount to the higher cent. Therefore, ownersintended to stay within the LBP may exceed it by only a few cents.

On the Rider effective date, the following applies to the calculation ofthe LBP.

-   -   If the covered life is Age 60 (or other predetermined age) or        older on the rider effective date, the LBP is equal to the        payment base multiplied by the WP for the covered life's        attained age.    -   If the covered life is Age 59 (or other predetermined age) or        younger on the rider effective date, the LBP is equal to zero.

On any contract anniversary immediately following the covered life's60^(th) birthday (or other predetermined age), applies to thecalculation of the LBP.

-   -   Option 1: The LBP is equal to the WP multiplied by the greater        of payment base or the contract value on the anniversary for        both the age-based and the market-based riders, single and        spousal. The LBP can fluctuate year to year due to market        performance, but will never be lower than the WP multiplied by        the PB as long as the covered life has reached the age of 60 (or        other predetermined age). Also, if the account value on the        anniversary exceeds the PB, the LBP may decrease in future years        but will never be less than the PB multiplied by the WP.

When a subsequent premium payment is made after the contract anniversaryimmediately following the covered life's 60^(th) birthday (or otherpredetermined age), the LBP is equal to the greater of: (i) the WP, onthe most recent contract anniversary, multiplied by the greater of thePB or contract value immediately after the subsequent premium isreceived, or (ii) the prior LBP.

Whenever a partial surrender is made on or after the contractanniversary immediately following the covered life's 60^(th) birthday(or other predetermined age):

-   -   If the PB is 0 (zero) due to withdrawals, the LBP is equal to 0        (zero). During the deferral stage, subsequent premiums may be        made to re-establish the PB and the LBP.

The LBP will be equal to the amount determined in either one as follows:

-   -   If the total partial surrenders since the most recent contract        anniversary are equal to or less than the current lifetime        benefit payment (LBP), the LBP is equal to the LBP immediately        prior to the partial surrender.    -   If the total partial surrenders since the most recent contract        anniversary are more than the current LBP, but all partial        surrenders were paid under the Automatic Income Required Minimum        Distribution (AI RMD), the provisions of above will apply.    -   If the total partial surrenders since the most recent contract        anniversary are more than the current LBP and the AI RMD        exception in above does not apply, the LBP is reset to the WP on        the most recent contract anniversary multiplied by the greater        of the PB or contract value immediately after the partial        surrender.

The contract owner may request an amount less than, equal to, or greaterthan the lifetime benefit payment. Total partial surrenders taken duringa contract year on or after the contract anniversary immediatelyfollowing the covered life's 60^(th) birthday (or other predeterminedage) which exceed the LBP may reduce future LBP values and may reducethe PB. If the total amount requested by the contract owner during acontract year is less than the lifetime benefit payment, the excesscannot be carried over to increase future years' lifetime benefitpayments.

-   -   Option 2: The annuity product includes a series of payout        periods, wherein the number of years in each payout period is        predetermined (preferably five years, or other predetermined        period), and wherein the number of years of each payout period        is greater than one year. Each of the yearly lifetime benefit        payment withdrawals during the given payout period is determined        and a withdrawal percent is used for each given year, wherein        the sum of the withdrawal percents from each given year within        the given payout period is equal to or less than the        predetermined maximum total withdrawal percent that is allowed        for the given payout period.

In one embodiment, the yearly lifetime benefit payment withdrawalsduring the given payout period are determined by the following formulas:LBP withdrawal(year 1)=(the Payment Base)×(the year 1 WithdrawalPercent),

-   -   wherein (the year 1 Withdrawal Percent) is selected by the        relevant life;        LBP withdrawal(year 2)=(the Payment Base)×(the year 2 Withdrawal        Percent),    -   wherein (the year 2 Withdrawal Percent) is selected by the        relevant life;        LBP withdrawal(year X)=(the Payment Base)×(the year X Withdrawal        Percent),    -   wherein (the year X Withdrawal Percent) is selected by the        relevant life;    -   wherein X=(the number of years of the first payout period);    -   wherein [(the year 1 Withdrawal Percent)+(the year 2 Withdrawal        Percent)+(the year X Withdrawal Percent)] is equal to or less        then (the maximum total Withdrawal Percent for the first payout        period),    -   wherein (the maximum total Withdrawal Percent for the first        payout period)=(the predetermined yearly Withdrawal Percent at        year 1)×(the number of years of the first payout period).

It is important to note that, in alternative embodiments, the maximumtotal withdrawal percent for a given payout period is not established byany specific formula, but rather is predetermined and is an arbitrarynumber. The above steps are repeated for each subsequent payment period.

The total withdrawal percent may be distributed for the given periodbetween each year within the given period by taking a larger withdrawalpercent in some years and a smaller withdrawal percent in others. Themaximum total withdrawal percent for the given period may not beexceeded however.

In one embodiment, if the total amount requested by the contract ownerduring a given period is less than the predetermined maximum totalwithdrawal percent times the payment base, or is zero, the excess can becarried over to increase future periods of lifetime benefit payments.However, the excess withdrawal percent that was not used will be limitedby the maximum total withdrawal percent for the next given period.Therefore, if in another embodiment, the remaining withdrawalpercentages are carried over from one withdrawal period to the next. Thecompany issuing the contract needs to pre-determine the fact that thewithdrawal percentages are not only grouped within a withdrawal period,but also across withdrawal periods. For example, a maximum totalwithdrawal percent of 15% can be distributed over 3 years, but that thecontract owner would also be able to take 30% over 6 years, not toexceed 15% within the first 3-year period. Thus, in this example, if acontract owner takes less than 15% in the first 3 years, then in thesecond 3-year period, the contract owner can take 30% less than theamount actually taken in the first 3 years.

Contingent Deferred Sales Charge (CDSC)—Free Up to the Amount of the LBP

If the LBP exceeds the actual withdrawal amount (AWA) on the most recentcontract anniversary, any contingent deferred sales charge (CDSC) willbe waived up to the LBP amount.

Death Benefit before Annuity Commencement Date

For both single and joint/spousal election, a death benefit may beavailable on the death of any owner or annuitant. For joint/spousalelection only, no death benefit will be available when a covered life isthe beneficiary, and the beneficiary dies. The death benefit provisionguarantees that upon death a death benefit (DB) will be paid equal tothe greater of the death benefit or the contract value as of the dateproof of death is received. The rider charge is not assessed on death.

When proof of death is processed, the contract will go into suspensemode. No charges will apply during that period. The amount available tobe paid as a death benefit under the terms of the rider is a return ofpremium adjusted for subsequent premium payments and partial surrenders.

At rider effective date:

-   -   If the rider is effective on the contract issue date, then the        DB equals the initial premium.    -   If the rider is effective after the Contract Issue Date, then        the DB equals 100% of the dollar amount of the Contract Value on        the Rider effective date, less any bonus payments paid into the        contract by the company in the last 12 months.

When a subsequent premium payment is received, the DB will be increasedby 100% of the dollar amount of the subsequent premium payment. If thewithdrawal feature is revoked, all future withdrawals from the deathbenefit will be fully proportional as of the date it is revoked.

Whenever a partial surrender is made prior to the contract anniversaryimmediately following the covered life's 60^(th) birthday (or otherpredetermined age), the death benefit is reduced for an adjustmentdefined below.

For the “threshold” definition, see the definition described in thesection entitled “Calculation of the Payment Base” supra.

For cumulative partial surrenders during each contract year that areequal to or less than the threshold, the adjustment is the dollar amountof the partial surrender. For any partial surrender that first causescumulative partial surrenders during the contract year to exceed thethreshold, the adjustment is the dollar amount of the partial surrenderthat does not exceed the threshold, and the adjustment for the remainingportion of the partial surrender is a factor. The factor is applied tothe portion of the death benefit that exceeds the threshold. The factoris defined as follows:1−(A/(B−C))

-   -   where    -   A=partial surrenders during the contract year in excess of the        threshold;    -   B=contract value immediately prior to the partial surrender; and    -   C=the threshold less any prior partial surrenders during the        contract year. If C results in a negative number, C becomes        zero.

For partial surrenders during each contract year, where the sum of theprior partial surrenders in the year that are in excess of thethreshold, the adjustment is a factor. The factor is applied to theadjusted death benefit immediately before the surrender. The factor isdefined as follows:1−(A/B)

-   -   where    -   A=the amount of the partial surrender;    -   B=contract value immediately prior to the partial surrender.

Whenever a partial surrender is made on or after the contractanniversary immediately following the covered life's 60^(th) birthday(or other predetermined age), the DB will be equal to the amountdetermined as follows:

-   -   If the total partial surrenders since the most recent contract        anniversary are equal to or less than the current lifetime        benefit payment (LBP), the DB becomes the DB immediately prior        to the partial surrender, less the amount of partial surrender,        less the amount of partial surrender paid out of the general        account of the company.    -   If the total partial surrenders since the most recent contract        anniversary are more than the current LBP, but all partial        surrenders were paid under the Automatic Income RMD (AI RMD),        the DB becomes the DB immediately prior to the partial        surrender, less the amount of partial surrender, less the amount        of partial surrender paid out of the general account of the        company.    -   If the total partial surrenders since the most recent contract        anniversary exceed the total current LBP and the AI RMD        exception does not apply, the adjustment is the dollar amount of        the partial surrender that does not exceed the LBP, and the        adjustment for the remaining portion of the partial surrender is        a factor. The factor for is applied to the portion of the Death        benefit that exceeds the LBP. The factor is as follows:        1−(A/(B−C))    -   where    -   A=partial surrenders during the contract year in excess of the        LBP;    -   B=contract value immediately prior to the partial surrender.    -   C=LBP less any prior partial surrenders during the contract        year. If C results in a negative number, C=0 (zero).

For partial surrenders during each contract year, where the sum of theprior partial surrenders in the year that are in excess of the currentLBP, the adjustment is a factor. The factor for adjustments for partialsurrenders for the DB is applied to the adjusted DB immediately beforethe surrender. The factor is as follows:1−(A/B)

-   -   where    -   A=the amount of the partial surrender;    -   B=contract value immediately prior to the partial surrender.        Contract Value (CV) Reduces below Minimum Account Rules

The minimum contract value rules are an optional feature of the presentinvention and do not apply to the preferred embodiments. If the minimumcontract value rules are selected to be applied, then the followingrules are used. The minimum contract value (MCV) is defined as 20% orother predetermined percentage of the payment base on the date of awithdrawal request. Lifetime benefit payments cannot reduce the contractvalue below this minimum threshold. Only sub-account performance andwithdrawals in excess of the LBP can decrease the contract value belowthe MCV.

-   -   If total partial surrenders since the most recent contract        anniversary are less than or equal to the difference between the        contract value and the MCV, the contract value will be reduced        by the total partial surrender.    -   If the contract Value at the time of a partial surrender is less        than or equal to the MCV, the contract value will not be        decreased for the partial surrender. The requested partial        surrender will be paid out of the general account assets of the        company.    -   If the contract value immediately before the partial surrender        is greater than the MCV, but would drop below the MCV after the        partial surrender, the contract value will be liquidated to pay        the LBP only to the extent it would equal the MCV. The remaining        portion of the LBP that is not funded by the contract value will        be paid out of the general account assets of the company.        Covered Life Change(s)—Single Life Elections

Any contractual change before the annuity commencement date (ACD) whichcauses a change in the covered life will result in a reset in thebenefits provided under the rider, and fund allocation restrictions maybe imposed.

Covered life changes in the first 6 months of the contract issue date(or during another time period) will not cause a change in the DB or PB.However, the WP and LBP may change based on the attained age of theoldest covered life after the covered life change.

-   -   If the covered life is changed and a withdrawal has been taken,        both within the first 6 months from contract issue date (or        during another time period), then the LBP and WP will be        calculated at the time of the covered life change and will be        based on the new covered life's attained age on the rider        effective date.    -   If the covered life is changed and a withdrawal has not been        taken, both within the first 6 months from contract issue date        (or during another time period), then the LBP and WP will be        calculated upon the first withdrawal:    -   If the first withdrawal is after the first 6 months and before        the first contract anniversary (or during another time period),        then the LBP and WP will be based on the new covered life's        attained age on the rider effective date.    -   If the first withdrawal occurs after the first contract        anniversary, then the LBP and WP will be calculated based on the        new covered life's attained age on the most recently attained        contract anniversary.    -   If the oldest covered life after the change is greater than the        age limitation of the rider at the time of the change, then the        rider will terminate, and the death benefit will be equal to        contract value.        Covered Life Changes—Single Life Election

Covered life changes after the first 6 months of contract issue datewill cause a reset in the benefits. If the oldest covered life after thechange is equal to or less than the age limitation of the rider at thetime of the change, then either below will automatically apply.

-   -   If the rider is not currently available for sale, the withdrawal        feature of the rider will be revoked.        -   The existing rider will continue with respect to the death            benefit only.        -   The death benefit will be recalculated to the lesser of            contract value or the DB on the effective date of the            covered life change.        -   The rider charge will be assessed on the revocation date,            and then will no longer be assessed.    -   If the rider is currently available for sale, the existing rider        will continue with respect to all benefits, at the current        contract rider charge.        -   The PB amount will be reset to the minimum of the contract            value or the PB on the date of the change.        -   The DB will be reset to the minimum of the contract value or            the DB on the date of the change        -   The WP and LBP will be recalculated on the date of the            change, and will be based upon the following.            -   A. If withdrawals are taken prior to the first contract                anniversary, a new covered life's attained age on the                rider effective date will be used.            -   B. If withdrawals are taken after the first contract                anniversary, the new covered life's attained age on the                contract anniversary prior to the first withdrawal will                be used.        -   The maximum contract value will be recalculated to equal the            contact value on the date of the covered life change.

If the oldest covered life after the change is greater than the agelimitation of the rider at the time of the change, the rider willterminate, and the DB will be equal to the contract value. If the rideris no longer available for sale and the issue age has changed the rider(to be determined on a non-discriminatory basis), and a covered lifechange occurs, and they exceed that newly determined age limitation,then rider will terminate, and the death benefit will be equal tocontract value.

Covered Life Change(s)—Joint Life Elections

Covered life changes after the first 6 months of contract issue date, ifowner and owner's spouse are no longer married, for reasons other thandeath, then covered life changes may occur as follows:

If surrenders have not been taken from the contract, then the PB, the DBand the MCV remain the same; covered life will be reset and the WP scalewill be based on the youngest covered life as of the date of the change.Additionally, the following covered life changes may occur.

-   -   Owner may remove spouse as covered life.    -   Owner may remove spouse as a covered life and replace original        spouse with new spouse. (These changes do not have to happen on        the same day.)

If surrenders have been taken from the contract, then the followingcovered life changes may occur.

-   -   Owner may remove spouse as covered life.    -   The PB, the DB and the MCV remain the same.    -   The WP scale will be based on the attained age of the remaining        covered life as of the date of the change.    -   Any changes other than removing the spouse will follow the rules        of below.

If the oldest covered life after the change is greater than (older) tothe age limitation of the rider at the time of the change, then therider will terminate. The death benefit will be equal to contract value.

If any other contractual change causes a change in the covered life,then either will automatically apply:

-   -   If the oldest covered life after the change is equal to or less        than (younger) the age limitation of the rider at the time of        the change, then the withdrawal feature of this rider will be        revoked. The existing rider will continue with respect to the        death benefit only. The rider charge is assessed on revocation        date, and then will no longer be assessed.    -   If the oldest covered life after the change is greater than        (older) the age limitation of the rider at the time of the        change, then the rider will terminate. The death benefit will be        equal to contract value. If the rider is no longer available for        sale and the issue age of the rider has been changed (to be        determined on a non-discriminatory basis), and a covered life        change occurs, and they exceed that newly determined age        limitation, then rider will terminate, and the death benefit        will be equal to contract value.    -   If the spouse dies and is the primary beneficiary and the        covered life, then the owner may remove them from the contract.        The PB, DB and MCV will remain the same. The WP will be        recalculated as follows:        -   If there has been a partial surrender since the rider            effective date, then WP will remain at the current            percentage.        -   If there has not been a partial surrender since the rider            effective date, then WP be based on the attained age of the            remaining covered life on the contract anniversary prior to            the first surrender.            Spousal Continuation            Single Life Election            In the event the contract owner dies and spousal            continuation is elected, the contract value will increase to            the DB value (the greater of the contract value and the DB).            The covered life will be re-determined on the date of the            continuation. If the covered life is less than age 81 (or            other predetermined age) at the time of the continuation,            then either of the following will automatically apply:    -   If the rider is not currently available for sale, the withdrawal        feature of the rider will be revoked. The existing rider will        continue with respect to the death benefit only (i.e., the        withdrawal feature will terminate). The rider charge is not        assessed on the revocation date, and then no longer assessed.    -   If the rider is currently available for sale, the existing rider        will continue with respect to all benefits at the current        contract rider charge. The payment base and the death benefit        will be set equal to the contract value on the continuation        date. The LBP and WP will be recalculated on the continuation        date. The WP will be recalculated based on the age of the oldest        covered life on the effective date of the spousal continuation.        If the WP had previously been locked in, then it will become        unlocked and can change based on the next withdrawal. The        maximum contract value will be set to contract value on the        continuation date.

If the Covered Life is greater than or equal to age 81 (or anotherpredetermined age) at the time of the continuation the Rider willterminate. The Death Benefit will be equal to Contract Value.

If the covered life is greater than or equal to 81 (or otherpredetermined age) at the time of the continuation, the rider willterminate. The death benefit will be equal to the contract value.

Joint/Spousal Continuation Election

In the event that the contract owner dies and spousal continuation iselected, the contract value will be increased to the DB value (thegreater of the contract value and the DB). The spouse may do thefollowing.

-   -   Continue the contract and the rider.

The existing rider will continue with respect to all benefits, at thecurrent contract rider charge. The payment base will be equal to thegreater of contract value or payment base on the continuation date. TheLBP will be recalculated to equal the withdrawal percent multiplied bythe greater of contract value or payment base on the continuation date.The maximum contract value will be the greater of payment base orcontract value on the continuation date. The DB will be equal to thebumped up contract value on the continuation date.

The WP recalculation rule:

-   -   The WP will remain at the current percentage if there has been a        partial surrender since the rider effective date.    -   If there has not been a partial surrender, the WP will be based        on the attained age of the remaining covered life on the        contract anniversary prior to the first surrender/withdrawal.

The contract owner can not name a new owner on the contract. Thecontract owner can name a new beneficiary on the contract. Any newbeneficiary added to the contract will not be taken into considerationas a covered life. The rider will terminate upon the death of thesurviving covered life.

-   -   Continue the contract and revoke the withdrawal feature of the        rider.

The charge is assessed on revocation date, and then no longer assessed.The covered life will be re-determined on the date of the continuationdate for death benefit purposes. If the covered life is greater than theage limitation at the time of continuation, the rider will terminate.The death benefit will be equal to contract value.

Effect of Death of Owner or Annuitant before the Annuity CommencementDate.

The following tables describe the effect of the death of the owner orannuitant before the annuity commencement date.

TABLE 1 Single Life Election If the Deceased is And . . . And . . . Thenthe . . . Contract Owner There is a The annuitant is living Jointcontract owner surviving or deceased receives the DB, Rider contractowner terminates Contract Owner There is no The annuitant is livingRider terminates surviving or deceased Designated Contract OwnerBeneficiary receives DB Contract Owner There is no surviving Theannuitant is living Rider terminates Contract Owner or deceased Estatereceives DB or Beneficiary Annuitant Contract Owner There is nocontingent Contract continues, no is living annuitant and the DB ispaid, Rider contract owner continues becomes the contingent annuitantAnnuitant Contract Owner There is no contingent Rider terminates, isliving annuitant and the contract owner contract owner waives receivesDB their right become the contingent annuitant Annuitant Contract Ownercontingent annuitant is Contingent annuitant is living living becomesannuitant and the contract and Rider continues Annuitant Contract OwnerThere is no contingent Contract owner is non-natural annuitant receivesDB, Rider person terminates

TABLE 2 Joint/Spousal Continuation Election Contingent Annuitant becomesAnnuitant If the annuitant dies where there is a contingent annuitant(who is different from the owner/annuitant), then the rider continuesand all provisions of the rider remain the same, there are no resets norDBs paid. Upon the death of the last surviving covered life, a DB ispaid to the beneficiary, and the rider terminates. If the Deceased is .. . And . . . And . . . Then the . . . Contract There is a The annuitantis The surviving contract Owner surviving living or deceased ownercontinues the contract owner contract and rider, increase the contractvalue to the death benefit value. Contract There is no The annuitant isIf the spouse is the Owner surviving living or deceased sole primarycontract owner beneficiary, follow spousal continuation rules for jointlife elections Contract There is no The annuitant is Rider terminatesOwner surviving living or deceased Estate receives DB contract owner orbeneficiary Annuitant Contract owner is If the spouse is the non-naturalsole primary person beneficiary, follow spousal continuation rules forjoint life elections Annuitant The owner is There is a living The ridercontinues; living contingent upon the death of the annuitant lastsurviving Covered Life, the rider will terminate.Effect of Death after the Annuity Commencement Date.The following table describes the effect of death after the annuitycommencement date.

TABLE 3 Single Life Election If the Deceased is And . . . And . . . Thenthe . . . Annuitant The annuitant Fixed Lifetime The lifetimecontingency is also the and Period ceases. The remaining contract ownerCertain is DB is paid under Period elected Certain.

TABLE 4 Joint/Spousal Continuation Election If the Deceased is . . . And. . . And . . . Then the . . . Annuitant The annuitant is also the FixedLifetime and Period The lifetime benefit contract owner, and Certain iselected ceases. The there is no surviving remaining DB is paid JointAnnuitant under Period Certain. Annuitant The annuitant is also theFixed Joint and Survivor Lifetime Benefit contract owner, and Lifetimeand Period continues until death there is a surviving Joint Certain iselected of last surviving Annuitant annuitantFund Allocation Restrictions

The right to restrict investment is reserved in any investment option inthe case of a change of covered life after six months. If the investmentoption restriction is imposed, the contract owner has the followingoptions:

-   -   Reallocate all existing money and all new premium to a        non-restricted investment option, an available asset allocation        program, or fund-of-fund investment option as may be offered        from time to time.    -   Revoke the Withdrawal Feature.        If the restrictions are violated, the withdrawal feature will be        revoked. The Death Benefit continues as is upon the date of        revocation.        Aggregation

For purposes of determining the PB under the rider, one or more deferredvariable annuity contracts issued with the rider attached in the samecalendar year as one contract. If the contracts are aggregated, theperiod will change over which withdrawals are measured against thebenefit payment.

The issuing company will treat the effective date of the election untilthe end of the calendar year as a contract year for the purposes of theLBP limit. A pro rata rider charge will be taken at the end of thatcalendar year. As long as total withdrawals in that period do not exceedthe LBP, the withdrawals will not necessitate a reset.

In future calendar years, the LBP limits will be aggregated and will beon a calendar year basis. In other words, withdrawals under allaggregated contracts in a calendar year will be compared against thecombined LBP limits for the aggregated contracts. If withdrawals exceedthose combined limits, the aggregate PB will be set to the combinedcontract values of the aggregated contracts. The LBP will then equalwithdrawal percent multiplied by the new PB.

If withdrawals do not exceed those combined limits, each withdrawal willreduce the PB dollar for dollar. The withdrawal benefits relating to thecontract value reaching zero will not apply until the contract value ofall aggregated contracts reaches zero.

The rider charge will be taken at the end of each calendar year. It willbe deducted pro rata from all of the sub-accounts and fixed accounts ofthe aggregated contracts. If the contract values of all aggregatedcontracts are reduced below our minimum account rules in effect, theannuity options will be offered as defined earlier in thisspecification. The options will pay the combined LBP.

Annuity Commencement Date

If the annuity reaches the maximum ACD, which is the later of the10^(th) contract anniversary and the date the annuitant reaches age 90,the contract must be annuitized unless it is agreed upon to extend theACD. In this circumstance, the contract may be annuitized under standardannuitization rules, but under no circumstances will the amount payablebe less than your LBP, provided that the certain period does not exceedthe Death Benefit remaining at the ACD divided by the LBP.

Single Life Election

Fixed lifetime and Period Certain Payout will be issued. The lifetimeportion will be based on the Covered Life determined at ACD. The CoveredLife is the Annuitant for this payout option. If there is more than oneCovered Life, then the lifetime portion will be based on both CoveredLives. The Covered Lives will be the Annuitant and Joint Annuitant forthis payout option. The lifetime portion will terminate on the firstdeath of the two. The minimum amount paid to owner under this AnnuityOption will at least equal the remaining DB under this rider.

If the oldest Annuitant is age 59 (or other predetermined age) oryounger, the date the payments begin will be automatically deferreduntil the oldest Annuitant attains age 60 (or other predetermined age)and is eligible to receive payments in a fixed dollar amount until thelater of the death of any Annuitant or a minimum number of years.

If the Annuitant(s) are alive and age 60 (or other predetermined age) orolder, payments will be received in a fixed dollar amount until thelater of the death of any Annuitant or a minimum number of years. Theminimum number of years that payments will be made is equal to theremaining DB under this rider divided by the product of the payment baseon the ACD multiplied by the greater of the WP and 5% Single (4½%Spousal).

${Single}\mspace{14mu}{{Election}:\frac{DB}{{PB} \times {{Max}\left( {{WP},{5\%}} \right)}}}$${{Joint}/{Spousal}}\mspace{14mu}{{Election}:\frac{DB}{{PB} \times {{Max}\left( {{WP},{4\mspace{11mu}\frac{1}{2}\%}} \right)}}}$This annualized amount will be paid over the greater of the minimumnumber of years, or until the death of any Annuitant, in the frequencythat is elected. The frequencies will be among those offered at thattime but will be no less frequent than annually. If, at the death of anyAnnuitant, payments have been made for less than the minimum number ofyears, the remaining scheduled period certain payments will be made tothe Beneficiary. A lump sum option is not available.Joint/Spousal Continuation Election:The minimum amount paid to owner under this Annuity Option will at leastequal the DB under this rider. If the younger Annuitant is alive and age59 (or other predetermined age) or younger, the date that payments beginwill be automatically deferred until the younger Annuitant attains age60 (or other predetermined age) and is eligible to receive payments in afixed dollar amount until the death of the last surviving Annuitant or aminimum number of years.

If the Annuitants are alive and the younger Annuitant is age 60 or older(or other predetermined age), payments will be received in a fixeddollar amount until the death of the last surviving Annuitant or aminimum number of years. The minimum number of years that payments willbe made is equal to the remaining DB under this rider divided by the LBPat annuitization. This annualized amount will be paid over the greaterof the minimum number of years, or until the death of the last survivingAnnuitant, in the frequency that is elected. The frequencies will beamong those offered at that time but will be no less frequent thanannually. If, at the death of the last surviving Annuitant, paymentshave been made for less than the minimum number of years, the remainingscheduled period certain payments will be made to the Beneficiary. Alump sum option is not available.

If both spouses are alive, the owner will be issued a Fixed Joint &Survivor Lifetime and Period Certain Payout. The Covered Life andCovered Life's spouse will be the Annuitant and Joint Annuitant for thispayout option. The lifetime benefit will terminate on the last death ofthe two. If one spouse is alive, the owner will be issued a FixedLifetime and Period Certain Payout. The lifetime portion will be basedon the Covered Life. The Covered Life is the Annuitant for this payoutoption. The lifetime benefit will terminate on the last death of theCovered Life.

Premium Restrictions

Prior company approval is required on all subsequent premium paymentsreceived after the first 12 months. The approval rules are as follows.

-   -   Any subsequent premium(s) will not be accepted if it brings the        total cumulative subsequent premiums in excess of $100,000        without prior approval.        Revoking the Withdrawal Feature

In one embodiment, at any time following the earlier of SpousalContinuation or the fifth anniversary of the Rider effective date, theContract Owner may elect to revoke the Withdrawal Feature of the Rider.The Payment Base will go to Zero and the Withdrawal Percent will go toZero, and LBP will go to Zero.

On the date the withdrawal feature is revoked, a pro rata share of theRider charge is equal to the Rider charge percentage multiplied by thePB, multiplied by the number days since the last charge was assessed,divided by 365. The Rider Charge will be assessed on revocation date,and then will no longer be assessed. The Death Benefit continues as isupon the date of the revocation. No other living benefit may be electedupon the revocation of the Withdrawal Feature.

In another embodiment, the Contract Owner can not elect to revoke thewithdrawal Feature. The Withdrawal Feature can be revoked in certaincircumstances.

Additional Annuity Contract(s) Rules

Additional terms of the contract(s) or rider(s) include the following.The benefits under the contract cannot be assigned. If the free lookprovision under the contract is exercised, the rider will terminate.

Subject to state approval, a rider will be made available on allcurrently available products issued on or after the date the rider islaunched for sale in the state of issue. This does not imply post-issueelection. Post-issue election will be determined on an as needed basis.See product requirements for a complete list.

If the rider effective date is after the contract issue date, then theperiod between the rider effective date and the next contractanniversary will constitute a contract year.

The employee gross-up is not considered premium for purposes of thepayment base and death benefit. Payment enhancements are not consideredpremium for purposes of the payment base and death benefit. Front-endloads are not taken from the premium for purposes of the payment baseand death benefit.

Turning now to the figures, FIG. 1 illustrates the manner in which a newannuity contract application is processed. The new applicationprocessing routine starts (block 102) when an application is completed.The annuity contract application and initial premium are received by theinsurance company (block 104). The annuity contract is then establishedthrough the contract establishing routine (block 106) as furtherdescribed in FIG. 2. After the annuity contract is established, theaccount value is then set up through the account value set routine(block 108), via the computer systems, as further specified in FIG. 3.Thereafter customer communication is established through the customercommunication routine (block 110) as further specified in FIG. 4. Theapplication processing routine ends at (block 112).

FIG. 2 is a flow chart that illustrates in more detail the manner inwhich an annuity contract is established. The annuity contractestablishing routine starts at (block 202). After receiving the annuitycontract application, customer demographics are determined (block 204).The customer demographics and other data from the annuity contractapplication are transmitted to the insurance company by any suitablemeans, such as electronic transmission, facsimile transmission,telephonic transmission, and the like. The customer demographics may bescanned in or electronically entered into the computer system by theinsurance company after the demographic data is determined. Suchdemographic information may include age, gender, date of birth, socialsecurity number, address, marital status, and the like. The customerdemographics may be used for a variety of purposes, such asidentification purposes or to locate a relevant life by searchinghis/her social security number. The customer demographics are also usedwhen determining and/or calculating a variety of factors that arerelated to the annuity contract, such as benefit amount calculations,tax considerations, and the like. The types of customer demographicsthat are determined are generally related to the type of annuitycontract application that is filled out by the relevant life. Thespecific product election is determined (block 206). For example, thespecific product may be elected from a group of different variableannuity products which each have different characteristics including thecosts and fees as well as the liquidity features associated therewith.The election of optional riders is determined (block 208). For example,the optional riders may be elected from a group of different riderswhich each have various guaranteed withdrawal features. The election ofinvestment options is determined (block 210). For example, theinvestment options include money market funds, bond funds, stock funds,and the like. The beneficiary is elected (block 212). In one aspect,this is the person who will collect the death benefits, if any. Thesource of the premium is determined (block 214). For example, the sourceof the premium may come from the relevant life's personal funds or maycome from another annuity in the form of a transfer. It should beunderstood that the steps taken for establishing the contract mayproceed in various orders and that the order shown in FIG. 2 is forillustrative purposes only and is only one embodiment of said steps. Thecontract establishing routine ends at (block 216).

FIG. 3 is a flow chart that illustrates in more detail the manner inwhich an account value is set up. The account value set up routinestarts at (block 302). The funds are received (block 304). For example,the funds may be received via electronic transfer from a bank account orfrom another variable annuity holder. The funds are then allocated basedon investment elections (block 306). For example, the allocations can beaccomplished through a computerized system according to the investmentelections by the relevant life. Unit values are established for theannuity contract (block 308). For example, based on the performance ofthe underlying investment elections, unit values are established,preferably on a daily basis, for use in determining the resulting impacton the relevant life's annuity contract based on their specific fundallocations. For example the number of units that are applied to eachannuity contract is different for each relevant life based on the numberof units held within the annuity contract. It should be understood thatthe steps taken for setting up the account value may proceed in variousorders and that the order shown in FIG. 3 is for illustrative purposesonly and is only one embodiment of said steps. The account value set uproutine ends at (block 310).

FIG. 4 is a flow chart that illustrates in more detail the manner inwhich customer communication is established. The customer communicationroutine starts at (block 402). Communications with the customer may beaccomplished via email, facsimile, letter, telephone, and the like.Communication with the customer in one aspect relates to the issuing ofthe contract (block 404). Communication with the customer in one aspectrelates to the relevant confirmation of the previous contract issuancecommunication (block 406). Any regulatory-imposed communication with theclient is accomplished (block 408). It should be understood that thesteps taken for establishing customer communication may proceed invarious orders and that the order shown in FIG. 4 is for illustrativepurposes only and is only one embodiment of said steps. The customercommunication routine ends at (block 410).

FIG. 5 is a flow chart illustrating the appropriate steps after awithdrawal is requested. The withdrawal processing routine starts at(block 502). A withdrawal is first requested by the relevant life at(block 504). The withdrawal is then processed according to the contractrules (block 506). The contract rules are embedded in a computer systemor the like and vary according to the type of annuity contract. Forexample, in certain embodiments, a requested withdrawal amount by therelevant life may be limited by the contract rules to a specificwithdrawal percent that is applied by the computer system, and whereinthe contract rules specify the withdrawal percent according to the ageof the relevant life or the number of years since the contract wasestablished. Therefore, the contract rules govern the data flow in thecomputer system. The contract rules are administratively built into thecomputer system to obviate the need for manual intervention by theinsurance company. The account value is reduced according to thecontract rules (block 508). The death benefit is reduced according tothe contract rules (block 510). The withdrawal benefit is adjustedaccording to the contract rules (block 512). The check or other form ofpayment is issued (block 516). The appropriate tax forms are generatedat year end (block 518). It should be understood that the steps takenfor processing withdrawals may proceed in various orders and that theorder shown in FIG. 5 is for illustrative purposes only and is only oneembodiment of said steps. The withdrawal processing routine ends at(block 520).

FIG. 6 is a flow chart illustrating a preferred embodiment of thepresent invention comprising a data processing method for administeringa deferred annuity contract for a relevant life. It should be understoodthat the order of the successive method steps in each Figure herein isshown for the sake of illustrating but one example, with that said, theorder of method steps can proceed in any variety of orders. In oneembodiment of the present invention, the invention comprises a dataprocessing method for administering a deferred annuity contract duringthe accumulation phase for a relevant life, the annuity product having apayment base, a contract value and yearly lifetime benefit payments.

Upon a triggering event, the payout procedure begins (block 600) and themethod enters the payout phase (block 602) of the annuity contract. Sucha triggering event may be a predetermined date or expiration of a settime period, preferably set by the company issuing the annuity.Alternatively, the triggering event may be the election of the relevantlife to begin withdrawing payouts or receiving lifetime benefitpayments. It should be understood that an annuity contract of thepresent invention preferably has a single payout phase with one or morepayout periods within the payout phase.

The number of payout periods within the payout phase will vary and maydepend on such factors as: the age of the relevant life at the start ofthe payout phase, the contract value at the start of the payout phase,the payment base at the start of the payout phase, the performance ofthe underlying investments during the payout phase, and the like. Uponentering the payout phase (602), the present method continues on to thestart of a (first) payout period (block 604). The present methoddetermines the number of years of a given payout period for the lifetimebenefit payments, wherein the number of years of the first payout periodis greater than one year (block 606).

The present method determines the maximum total withdrawal percent for agiven payout period (block 605). If requested by the relevant life andthe covered life is older than a predetermined age (i.e. 60 years old),the present method periodically calculates a yearly lifetime benefitpayment for the relevant life (block 610), which decreases the contractvalue. The amount of the lifetime benefit payment withdrawal for eachgiven year within the given payout period is determined by receiving aninstruction from the relevant life that provides a withdrawal percent touse for each given year, wherein the sum of the withdrawal percents fromeach given year within the given payout period, as provided by therelevant life's instructions, is equal to or less than the predeterminedmaximum total withdrawal percent that is allowed for the given payoutperiod.

The withdrawal percents provided by the relevant life's instructions maydiffer for each given year within the first payout period. After the endof each given payout period (block 612), the method determines whetherthe relevant life is finished taking payouts (block 614). If therelevant life is not finished taking payouts, then the method repeatsthe above method steps for the next payout period. If the relevant lifeis finished taking payouts, then the method exits the payout phase(block 616), and the payout procedure ends. (block 618). It should beunderstood that there are several situations that could lead to arelevant life being finished with taking payouts during the payoutphase. Such reasons may include: the contract value has reached aminimum value, if any, or has reached zero, the relevant life has died,the relevant life has chosen to annuitize the contract, and the like.

FIG. 7 is a flow chart illustrating an alternative embodiment of thepresent invention comprising a data processing method for administeringa deferred annuity contract for a relevant life. Upon a triggeringevent, the payout procedure begins (block 700) and the method enters thepayout phase (block 602) of the annuity contract. After entering thepayout phase (block 602), the method continues on to the start of a(first) payout period (block 604). The present method determines thenumber of years of a given payout period for the lifetime benefitpayments, wherein the number of years of the first payout period isgreater than one year (block 606).

The present method determines the maximum total withdrawal percent for agiven payout period (block 608). The method calculates a payment basefor the annuity product, which is a function of the previous premiumpayments made by the relevant life (block 702). If requested by therelevant life, the method periodically accepts premium payments from therelevant life, which increase the payment base and the contract value(block 704). If requested by the relevant life and the covered life isolder than a predetermined age (i.e. 60 years old), the present methodperiodically calculates a yearly lifetime benefit payment for therelevant life (block 610), which decreases the contract value.

The amount of the lifetime benefit payment withdrawal for each givenyear within the given payout period is determined by receiving aninstruction from the relevant life that provides a withdrawal percent touse for each given year, wherein the sum of the withdrawal percents fromeach given year within the given payout period, as provided by therelevant life's instructions, is equal to or less than the predeterminedmaximum total withdrawal percent that is allowed for the given payoutperiod. The withdrawal percents provided by the relevant life'sinstructions may differ for each given year within the first payoutperiod.

After the end of each given payout period (block 612), the methoddetermines whether the relevant life is finished taking payouts (block614). If the relevant life is not finished taking payouts, then themethod repeats the above method steps for the next payout period. If therelevant life is finished taking payouts, then the method exits thepayout phase (block 616) and the payout procedure ends (block 706).

In one embodiment, each of the yearly lifetime benefit paymentwithdrawals during the given payout period are determined by thefollowing formulas:LBP withdrawal(year 1)=(the Payment Base)×(the year 1 WithdrawalPercent),

-   -   wherein (the year 1 Withdrawal Percent) is selected by the        relevant life;        LBP withdrawal(year 2)=(the Payment Base)×(the year 2 Withdrawal        Percent),    -   wherein (the year 2 Withdrawal Percent) is selected by the        relevant life;        LBP withdrawal(year X)=(the Payment Base)×(the year X Withdrawal        Percent),    -   wherein (the year X Withdrawal Percent) is selected by the        relevant life;        wherein X=(the number of years of the given payout period);        wherein [(the year 1 Withdrawal Percent)+(the year 2 Withdrawal        Percent)+ . . . +(the year X Withdrawal Percent)] is equal to or        less then (the maximum total Withdrawal Percent for the given        payout period),        wherein (the total Withdrawal Percent for the given payout        period) is preferably predetermined by the company issuing the        annuity product. It is important to note that, in alternative        embodiments, the total Withdrawal Percent for a given payout        period is not established by any specific formula, but rather is        predetermined and is an arbitrary number.

FIG. 8 is a flow chart illustrating an alternative embodiment of thepresent invention comprising a data processing method for administeringa deferred annuity contract for a relevant life. Upon a triggeringevent, the payout procedure begins (block 800) and the method enters thepayout phase (block 602) of the annuity contract. After entering thepayout phase (block 602) the method continues on to the start of a(first) payout period (block 604). The present method determines thenumber of years of a given payout period for the lifetime benefitpayments, wherein the number of years of the first payout period isgreater than one year (block 606).

The present method predetermines a yearly withdrawal percent chart,which provides a withdrawal percent for each year of the relevant life'sfuture age (block 802). The present method determines the maximum totalwithdrawal percent for a given payout period (block 608). If requestedby the relevant life and the covered life is older than a predeterminedage (i.e. 60 years old), the present method periodically calculates ayearly lifetime benefit payment for the relevant life (block 610), whichdecreases the contract value.

The amount of the lifetime benefit payment withdrawal for each givenyear within the given payout period is determined by receiving aninstruction from the relevant life, which provides a withdrawal percentto use for each given year, wherein the sum of the withdrawal percentsfrom each given year within the given payout period, as provided by therelevant life's instructions, is equal to or less than the predeterminedmaximum total withdrawal percent that is allowed for the given payoutperiod.

The withdrawal percents provided by the relevant life's instructions maydiffer for each given year within the first payout period. After the endof each given payout period (block 612), the method determines whetherthe relevant life is finished taking payouts (block 614). If therelevant life is not finished taking payouts, then the method repeatsthe above method steps for the next payout period. If the relevant lifeis finished taking payouts, then the method exits the payout phase(block 616) and the payout procedure ends (block 804).

In this embodiment, the maximum total withdrawal percent for the givenpayout period is calculated using the following formula: (the maximumtotal Withdrawal Percent for the given payout period)=(the predeterminedyearly Withdrawal Percent at the first year of the given payout periodaccording to the withdrawal percent chart)×(the number of years of thegiven payout period).

Referring next to FIG. 9, depicted is a preferred embodiment of a systemon which the methods of the present invention may be implemented. In oneexample of the preferred embodiment, the insurance contract generatingsystem 914 would generally be used by an insurance provider 902, howeverthe system may be operated by any individual or organization offering aninsurance product as outlined in the present specification withoutdeparting from the spirit of the present invention.

System 914 may be implemented in many different ways such as part of asingle standalone server or as a network server or servers which may bedistributed across multiple computing systems and architectures.Preferably, the central processing computer or network server includesat least one controller or central processing unit (CPU or processor),at least one communication port or hub, at least one random accessmemory (RAM), at least one read-only memory (ROM) and one or moredatabases or data storage devices. All of these later elements are incommunication with the CPU to facilitate the operation of the networkserver.

The network server may also be configured in a distributed architecture,wherein the server components or modules are housed in separate units orlocations. Each of the modules described may be implemented as singleservers or one or more or all of the modules may be incorporated into asingle server. These servers will perform primary processing functionsand contain at a minimum, a RAM, a ROM, and a general controller orprocessor. In such an embodiment, each server is connected to acommunications hub or port that serves as a primary communication linkwith other servers, clients or user computers and other related devices.The communications hub or port may have minimal processing capabilityitself, serving primarily as a communications router. A variety ofcommunications protocols may be part of the system, including but notlimited to: Ethernet, SAP, SAS™, ATP, Bluetooth, GSM and TCP/IP.

In the preferred embodiment, all of the modules described herein areoperably inter-connected via a central communications bus 938. Thecommunications bus 938 is able to receive information from each of themodules, as well as to transmit information from one module to another.The insurance contract generating system 914 further includes a displaymodule 904, and a generating module 906. The generating module is usedfor generating an insurance contract, wherein the insurance contractprovides coverage to an individual or group for at least one eventdefined in the insurance contract.

The insurance contract generating system 914 additionally includes apayment module 908 for making payments to an insured individual or groupfor a predetermined period of time as defined by the deferred annuityinsurance contract.

The system further comprises a beneficiary module 910 for choosing abeneficiary to receive payments from the insurance provider in theinstance of an insured individual's death. Furthermore, the systemcomprises a dependent module 912 for offering an insurance contractstructured according to the methods of the present invention todependents of an individual eligible for the insurance contractdescribed herein.

Additionally, the insurance contract generating system 914 includes: astorage drive 916 for receiving data stored on a storage disc, aprocessing module 918 for processing digital data received by andcontained in the insurance contract generating system 914, acommunication module 920 for bi-directional communication with externaland telecommunications systems, a data storage module 922 for storingand managing digital information, a text data input module 924 forinputting data in the form of text, and a data input module 926 forconverting to digital format documents and images and inputting theminto the insurance contract generating system 914.

Finally, the insurance contract generating system 914 includes: an audiodata input module 928 for receiving and inputting audio information, anaudio data output module 930 for outputting data in audio format (i.e.recorded speech, synthetically generated speech from digital text, etc),a memory module 932 for temporarily storing information as it is beingprocessed by the processing module 918, a universal serial bus interfacemodule 934 for receiving and transmitting data to and from devicescapable of establishing a universal serial bus connection, and a digitaldata input interface module 936 for receiving data contained in digitalstorage devices.

Data storage device may include a hard magnetic disk drive, tape,optical storage units, CD-ROM drives, or flash memory. Such data storagedevices generally contain databases used in processing transactionsand/or calculations in accordance with the present invention. In oneembodiment, the database software creates and manages these databases.Insurance-related calculations and/or algorithms of the presentinvention are stored in storage device and executed by the CPU.

The data storage device may also store, for example, (i) a program(e.g., computer program code and/or a computer program product) adaptedto direct the processor in accordance with the present invention, andparticularly in accordance with the processes described in detailhereinafter with regard to the controller; (ii) a database adapted tostore information that may be utilized to store information required bythe program. The database includes multiple records, and each recordincludes fields that are specific to the present invention such asinterest rates, contract value, payment base value, step up percent,premiums, subscribers, payouts, claims, etc.

The program may be stored, for example, in a compressed, an uncompiledand/or an encrypted format, and may include computer program code. Theinstructions of the program may be read into a main memory of theprocessor from a computer-readable medium other than the data storagedevice, such as from a ROM or from a RAM. While execution of sequencesof instructions in the program causes the processor to perform theprocess steps described herein, hard-wired circuitry may be used inplace of, or in combination with, software instructions forimplementation of the processes of the present invention. Thus,embodiments of the present invention are not limited to any specificcombination of hardware and software.

Suitable computer program code may be provided for performing numerousfunctions such as providing a deferred annuity insurance contract to anindividual, generating a deferred annuity insurance contract, and makingpayments to the individual as defined in the deferred annuity insurancecontract. The functions described above are merely exemplary and shouldnot be considered exhaustive of the type of function, which may beperformed by the computer program code of the present inventions.

The computer program code required to implement the above functions (andthe other functions described herein) can be developed by a person ofordinary skill in the art, and is not described in detail herein.

The term “computer-readable medium” as used herein refers to any mediumthat provides or participates in providing instructions to the processorof the computing device (or any other processor of a device describedherein) for execution. Such a medium may take many forms, including butnot limited to, non-volatile media, volatile media, and transmissionmedia. Non-volatile media include, for example, optical or magneticdisks, such as memory. Volatile media include dynamic random accessmemory (DRAM), which typically constitutes the main memory. Common formsof computer-readable media include, for example, a floppy disk, aflexible disk, hard disk, magnetic tape, any other magnetic medium, aCD-ROM, DVD, any other optical medium, punch cards, paper tape, anyother physical medium with patterns of holes, a RAM, a PROM, an EPROM orEEPROM (electronically erasable programmable read-only memory), aFLASH-EEPROM, any other memory chip or cartridge, a carrier wave asdescribed hereinafter, or any other medium from which a computer canread.

Various forms of computer readable media may be involved in carrying oneor more sequences of one or more instructions to the processor (or anyother processor of a device described herein) for execution. Forexample, the instructions may initially be borne on a magnetic disk of aremote computer. The remote computer can load the instructions into itsdynamic memory and send the instructions over an Ethernet connection,cable line, or even telephone line using a modem.

A communications device local to a computing device (or, e.g., a server)can receive the data on the respective communications line and place thedata on a system bus for the processor. The system bus carries the datato main memory, from which the processor retrieves and executes theinstructions. The instructions received by the main memory mayoptionally be stored in the memory either before or after execution bythe processor. In addition, instructions may be received via acommunication port as electrical, electromagnetic or optical signals,which are exemplary forms of wireless communications or data streamsthat carry various types of information.

Servers of the present invention may also interact and/or control one ormore user devices or terminals. The user device or terminal may includeany one or a combination of a personal computer, a mouse, a keyboard, acomputer display, a touch screen, LCD, voice recognition software, orother generally represented by input/output devices required toimplement the above functionality. The program also may include programelements such as an operating system, a database management system and“device drivers” that allow the processor to interface with computerperipheral devices (e.g., a video display, a keyboard, a computer mouse,etc).

For example, a user provides instructions for the amount of the livingbenefit payment that is requested. It should be understood that the usermay communicate with the computing system directly or indirectly throughanother party, such as the insurance provider 902. In the event the usercommunicates with an insurance provider 902, the insurance provider 902than receives and transfers information, to and from the insurancecontract generating system 914 via the text data input module 924, audiodata input module 928, audio data output module 930 and the displaymodule 904. For example, the relevant life may provide instructions tothe insurance provider 902 indicating the withdrawal percent to use foreach given year during the payout phase as described herein.

Furthermore, as used herein the data storage module 922 is also referredto as a storage device. The processing module 918 is contained withinthe insurance contract generating system 914, which is coupled to thestorage device, the storage device stores instructions that are utilizedby the processor. The instructions comprise: (i) an instruction fordetermining a series of payout periods, wherein the number of years ofeach payout period is greater than one year; (ii) an instruction fordetermining a maximum total withdrawal percent for each payout period;and (iii) an instruction for calculating the amount of the lifetimebenefit payment withdrawal for each given year within a given payoutperiod. Whereby the relevant life preferably provides a withdrawalpercent to use for each given year, wherein the sum of the withdrawalpercents from each given year with the payout period is equal to or lessthan the predetermined maximum total percent that is allowed for thegiven payout period.

Turning now to FIG. 10, shown is table 1000, which illustrates exemplarylifetime benefit payments or clustered withdrawals 1016 paid to therelevant life, which are illustrated by “Clustered Withdrawals” column1006. Furthermore, FIG. 10 includes supplemental table 1001, whichindicates that the example illustrated by table 1000 contains afive-year maximum withdrawal time period 1010 as well as a maximumwithdrawal amount 1012 throughout each five year period. For exemplarypurposes, maximum withdrawal amount 1012 for each five year period is$25,000 and table 1000 contains five, five year periods.

Additionally, table 1000 includes “Remaining 5 Year Total W/D” column1004, which illustrates the dollar value in terms of lifetime benefitpayments or withdrawals 1014 that are entitled to the relevant life uponthe end of the current year, whereby total remaining withdrawal 1014 iscalculated by subtracting the previous clustered withdrawal 1016 fromthe previous total remaining withdrawal 1014. “Total 5 Year W/D” column1008 tracks the total amount of withdrawals 1018 that are made by therelevant life throughout each five year period. “Age” column 1002 tracksthe age 1020 of the relevant life throughout this example. Asillustrated by table 1000, total remaining withdrawal 1014, clusteredwithdrawal 1016, and total amount of withdrawal 1018 all reset aftereach five year period.

For example, at Age 1, the total remaining withdrawal 1014 entitled tothe relevant life is set at $25,000. The clustered withdrawal 1016 atage 1, which was arbitrarily selected for this example, is $15,000.Therefore, the total amount of withdrawals 1018 at this point is$15,000, which is correctly illustrated in “Total 5 Year W/D” column1008. At age 2, the total remaining withdrawal that is currentlyavailable to the relevant life is now only $10,000. This value wascalculated by utilizing the method as previously discussed above, inthis example the current total remaining withdrawal is equal to $25,000minus $15,000. At age 2, the clustered withdrawal 1016 is $10,000, whichwas once again arbitrarily chosen.

Therefore, the total amount of lifetime benefit payments or withdrawals1018 entitled to the relevant life has been exhausted at $25,000. Henceat age 3, the total remaining withdrawal 1014 for this specific fiveyear period is now $0, which is represented in table 1000 with a “−”symbol. Additionally, the “−” symbol represents $0 and it is utilizedthroughout table 1000. The remaining five year periods represented bytable 1000 all operate in a similar manner, but each period illustratesvarious exemplary withdrawals, which are used only to help

FIG. 11 illustrates a graph 1100, titled “Lifetime Benefit PaymentsClustering Withdrawals in 5 Year Pieces,” which further illustrates theexample represented by table 1000 of FIG. 10. More specifically, graph1100 includes a lifetime benefit payment or withdrawal scale 1002, whichillustrates withdrawal values 1110 as a function of age 1104 within fiveyear pieces. The function of age 1104 is measured in years, but may bemeasured in other periods of time (days, weeks, months, decades, etc.)and is illustrated on the x-coordinate of graph 1100 so as to accuratelycorrespond to table 1000 of FIG. 10.

Additionally, graph 1100 illustrates the total remaining withdrawal 1106by utilizing white columns and the clustered withdrawals 1108 byutilizing dark columns, which is clearly indicated by the table key1112. Essentially, graph 1100 visually illustrates the examplerepresented within table 1000 of FIG. 10. For example, at age 1, thetotal remaining withdrawal 1106 illustrates a withdrawal value 1110 of$25,000, which directly corresponds with the total remaining withdrawal1014 of table 1000 at age 1. Additionally, at age 1, the clusteredwithdrawal 1108 illustrates a withdrawal value 1110 of $15,000, whichaccurately corresponds with the clustered withdrawal 1016 of table 1000at age 1.

It should be understood that several of the method steps of the presentinvention require a computer in order to be able to determine therespective values. In other words, a computer is required to use themethod of the present invention; that is to say the calculations andappropriate data records must be accomplished by computer. For example,in one embodiment of the present invention, the payment base is relatedto premium payments by the relevant life. In one embodiment, thelifetime benefit payment is dependent on a selected withdrawalpercentage. Although the method and system require an instruction fromthe relevant life for the withdrawal percent to use for each given year,the instruction does not have to come directly from the relevant life.

The instruction may come indirectly by going through the company issuingthe contract or other third party or agent. In one embodiment, thepredetermined withdrawal percent is based on the age of the relevantlife at the time of the first requested lifetime benefit payment. Asnoted above, in alternative embodiments, the maximum total withdrawalpercent for a given payout period may be established by a specificformula, or may be predetermined and is an arbitrary number for anygiven period.

The annuity commencement date is a date established according to rules,with certain restrictions. The initial guaranteed death benefit amountis determined in a similar fashion. Preferably, the initial guaranteeddeath benefit amount is set for calculation purposes. In a preferredembodiment, the initial guaranteed death benefit amount is equal to thepayment base.

The lifetime benefit payment is paid periodically, such as yearly,quarterly, monthly, weekly, etc. The lifetime benefit payment withdrawalpercent that is requested by the relevant life for a given year may beany amount greater than zero and equal to or less than the maximum totalwithdrawal percent remaining for the given payout period. The availablelifetime benefit payment withdrawal percent that is remaining isdetermined at the start of each new year. However, the relevant lifedoes not have to elect the highest possible available lifetime benefitpayment at any given time. That is, the relevant life may choose how to“spread” the total withdrawal percent that is available for a givenpayout period between the individual years within the payout period. Thevalue that is requested by the relevant life, if any, for the lifetimebenefit payment for a given year will be subtracted from the contractvalue, but not from the payment base.

In a preferred embodiment, the relevant life may not request a yearlylifetime benefit payment withdrawal until after: (i) the expiration of amoratorium period, which is measured from the issue date of thecontract; or (ii) the date the relevant life reaches age 60 (or otherpredetermined age), whichever is later. In one embodiment, such amoratorium period is five years. Any length of time may be selected forthe moratorium period. Preferably, the predetermined yearly withdrawalpercent is a function of the relevant life's age.

In one embodiment, once the first lifetime benefit payment withdrawal istaken, then that withdrawal percent is used to calculate the maximumtotal withdrawal percent that is available for a given payout period bymultiplying that first withdrawal percent by the number of years in thepayout period. In another embodiment, the withdrawal percent used tocalculate the maximum total withdrawal percent available for a givenpayout period continues to rise with the relevant life's age, no matterif the relevant life has already begun to take lifetime benefitpayments. In another embodiment, the withdrawal percent may eitherincrease or decrease over the term of the annuity. Alternatively, thewithdrawal percent may fluctuate over the term of the annuity.

It should be noted that the predetermined withdrawal percents for eachyear of the relevant life's future age is different than the withdrawalpercent that is elected by the relevant life for any given year in anygiven payout period. As described above, the predetermined withdrawalpercents are used in certain embodiments in order to calculate themaximum total withdrawal percent for any given payout period.

In a further embodiment, the present method further comprises the stepof: periodically paying a withdrawal payment during a given payoutperiod—that is in excess of: (the maximum total Withdrawal Percent forthe given payout period)×(the Payment Base)—to the relevant life fromthe contract value which decreases each of: the contract value and thepayment base.

The lifetime benefit payment for any given year, if any, is paid inperiodic installments throughout the given year, or alternatively, ispaid in a single installment during the given year. The withdrawalpercent used may fluctuate for each year during any given payout periodaccording to the needs and/or preferences of the relevant life. Thenumber of years in the payout period is in the range of 2 to 20 years,more preferably in the range of 3 to 10 years, and most preferably 5years. In a preferred embodiment, the number of years of the firstpayout period for the lifetime benefit payments is the same as thenumber of years of each subsequent payout period, if any. The yearlypredetermined withdrawal percent may be fixed; may increase at thebeginning of each subsequent payout period; may decrease at thebeginning of each subsequent payout period; or may fluctuate over theterm of the annuity.

In a further embodiment, the present method further comprises the stepof collecting a rider fee or collecting an account maintenance fee. Inanother embodiment, the present method further comprises the step ofpaying a death benefit to a beneficiary upon the death of the relevantlife, wherein the death benefit is the greater of: (a) a predeterminedguaranteed death benefit amount; and (b) the present contract value.Alternatively, the guaranteed death benefit is paid to the beneficiaryonly if the relevant life dies during the accumulation phase.Preferably, if the contract value reaches a predetermined minimum value,then the contract annuitizes and annuity payments commence. Preferably,the value of the annuity payments, if any, equals the value of the lastguaranteed lifetime benefit payment.

In another embodiment, the present invention comprises a deferredannuity contract having yearly lifetime benefit payments, comprising:(i) means for predetermining a series of payout periods, wherein thenumber of years of each payout period is greater than one year; (ii)means for predetermining a maximum total withdrawal percent for eachpayout period; and (iii) means for calculating the amount of thelifetime benefit payment withdrawal for each given year within a givenpayout period by receiving an instruction from the relevant life thatprovides a withdrawal percent to use for each given year, wherein thesum of the withdrawal percents from each given year within the payoutperiod is equal to or less than the predetermined maximum totalwithdrawal percent that is allowed for the given payout period.

In another embodiment, the present invention comprises a system foradministering a deferred variable annuity contract during theaccumulation phase, the annuity contract having a payment base, acontract value and yearly lifetime benefit payments, the improvementcomprising: (i) administrative means for predetermining a series ofpayout periods, wherein the number of years of each payout period isgreater than one year; (ii) administrative means for predetermining amaximum total withdrawal percent for each payout period; and (iii)administrative means for calculating the amount of the lifetime benefitpayment withdrawal for each given year within a given payout period thatprovides a withdrawal percent to use for each given year, wherein thesum of the withdrawal percents from each given year within the payoutperiod is equal to or less than the predetermined maximum totalwithdrawal percent that is allowed for the given payout period.

In another embodiment, the annuity product includes a step-up provisionwherein the payment base is increased in response to positiveperformance of the underlying investments of the contract for a givenperiod. Preferably, the step-up would take place at the beginning ofeach new payout period (e.g. every five years).

Other formulas may be utilized to determine the yearly lifetime benefitpayment amount, wherein the withdrawal base is related to other valuesbesides the payment base and/or the contract value.

The following description and examples further illustrate the preferredfeatures of the present invention.

Preferably, there is a mandatory moratorium period, which is measuredfrom the issue date of the contract. In one embodiment, the moratoriumperiod is five years. The present method allows several years ofwithdrawal percents to be clustered together, and providing the enhancedflexibility to select a lifetime benefit payment amount based on thepreferences and needs of the relevant life. The annuity contract has aseries of payout periods, wherein each payout period has a maximum totalwithdrawal percent that may not be exceeded. Alternatively, the maximumtotal withdrawal percent for a given payout period may be exceeded if itis part of the multi-period withdrawal percentage total as describedherein.

In one embodiment, the maximum total withdrawal percent for any givenpayout period is calculated as the first year's predetermined yearlywithdrawal percent during the payout period times the number of years inthe given payout period. It is important to note that, in alternativeembodiments, the maximum total withdrawal percent for a given payoutperiod is not established by any specific formula, but rather ispredetermined and is an arbitrary number. For example, the maximum totalwithdrawal percent could be predetermined to be 15% over a three yearpayout period. In a preferred embodiment, the maximum predeterminedyearly withdrawal percent is guaranteed at a predetermined percentage,for example about 10%.

Preferably, there is a maximum withdrawal percent for any given year, sothat the relevant life cannot take the entire total withdrawal percentfor the payout period in a single year. In another preferred embodiment,the maximum withdrawal in a given year is guaranteed at a value between0% and the maximum withdrawal percent for the withdrawal period. Forexample, if someone withdraws 15% over three years, the maximum in anysingle year may be 10%. In another feature of the invention, anywithdrawal percent amount that is not taken during a given payout periodmay be rolled into the next payout period, thereby increasing theavailable withdrawals for that payout period, if certain restrictionsare met. In an alternative feature of the present invention, the productrequires asset allocation constraints set by the company issuing theannuity product.

Example 1

The following example illustrates one embodiment of the present methodand system. The following starting parameters are set for the followingexample. Such starting parameters are strictly for the purposes ofillustration. For example, the withdrawal percentage may be in the rangeof 0% to 100%, and more preferably in the range of 0% to 50%.

Certain starting parameters must be established prior to running themethod of the present invention. In the following embodiments, apredetermined yearly withdrawal percent for each year of the relevantlife's future age must be determined. For the purposes of illustration,the following values are used:

Yearly Withdrawal Percent for Each Year of the Relevant Life's FutureAge:

5.0% for attained ages 60 to 64;

5.5% for attained ages 65 to 69;

6.0% for attained ages 70 to 74;

6.5% for attained ages 75 to 79; and

7.0% for attained ages 80 and above.

Next, the number of years in each payout period for the lifetime benefitpayments must be determined, wherein the number of years of each payoutperiod is greater than one year. For the purposes of illustration, eachpayout period is five years.

Using these starting parameters, below is an illustrative example of thepresent invention. For the purposes of illustration, the relevant lifeis 60 years old on Mar. 31, 1983. For purposes of illustration, therelevant life purchased the contract when he was 50 years old and themoratorium period requirement, if any, was satisfied. For the purposesof illustration, the value of the underlying funds within the contractremains flat. That is, the underlying funds of the contract do notexhibit growth or decline. This fact is merely for illustrative purposesof this example. In a typical example, the underlying funds of thevariable annuity will show growth or decline from year to year, whichwill be factored in, together with any lifetime benefit payment for thegiven year, in calculating the contract value at the beginning of eachyear.

TABLE 5 First (5 year) payout period: Maximum Total Withdrawal Percentfor the first payout period = 5.0% × 5 years = 25.0% guaranteed Age ofWithdrawal lifetime relevant Period Premium Contract Payment Percentbenefit life Ended Payment Value Base Selected payment 60 Mar. 31, 1983100,000 100,000 100,000 5.0% 5,000 61 Mar. 31, 1984 — 95,000 100,000  0% 0 62 Mar. 31, 1985 — 95,000 100,000 2.0% 2,000 63 Mar. 31, 1986 —93,000 100,000 6.0% 6,000 64 Mar. 31, 1987 — 87,000 100,000 12.0% 12,000

TABLE 6 Second (5 year) payout period: Maximum Total Withdrawal Percentfor the second payout period = 5.5% × 5 years = 27.5% guaranteed Age ofWithdrawal lifetime relevant Period Premium Contract Payment Percentbenefit life Ended Payment Value Base Selected payment 65 Mar. 31, 1988— 75,000 100,000 9.0% 9,000 66 Mar. 31, 1989 — 66,000 100,000   0% 0 67Mar. 31, 1990 — 66,000 100,000   0% 0 68 Mar. 31, 1991 — 66,000 100,000 16% 16,000 69 Mar. 31, 1992 — 50,000 100,000 2.5% 2,500

TABLE 7 Third (5 year) payout period: Maximum Total Withdrawal Percentfor the third payout period = 6.0% × 5 years = 30.0% guaranteed Age ofWithdrawal lifetime relevant Period Premium Contract Payment Percentbenefit life Ended Payment Value Base Selected payment 70 Mar. 31, 1993— 47,500 100,000  5.0% 5,000 71 Mar. 31, 1994 — 42,500 100,000 10.0%10,000 72 Mar. 31, 1995 — 32,500 100,000 15.0% 15,000 73 Mar. 31, 1996 —27,500 100,000 0 0 74 Mar. 31, 1997 — 27,500 100,000 0 0

The following payout periods in this example will continue until thecontract value reaches a predetermined minimum value, upon which timethe contract will annuitize and annuity payments will commence.Preferably, the annuity payments will not begin until the present payoutperiod has expired.

Having thus described the invention in rather full detail, it will beunderstood that such detail need not be strictly adhered to, but thatadditional changes and modifications may suggest themselves to oneskilled in the art, all falling within the scope of the invention asdefined by the subjoined claims.

While the present invention has been described with reference to thepreferred embodiment and several alternative embodiments, whichembodiments have been set forth in considerable detail for the purposesof making a complete disclosure of the invention, such embodiments aremerely exemplary and are not intended to be limiting or represent anexhaustive enumeration of all aspects of the invention. The scope of theinvention, therefore, shall be defined solely by the following claims.Further, it will be apparent to those of skill in the art that numerouschanges may be made in such details without departing from the spiritand the principles of the invention. It should be appreciated that thepresent invention is capable of being embodied in other forms withoutdeparting from its essential characteristics.

1. A data processing system for administering a deferred variableannuity contract during the accumulation phase, the annuity contracthaving a payment base value, a contract value representing an amount offunds subject to investment control by a contract owner and benefitpayments, said system comprising: a storage device; a processor coupledto the storage device, the storage device storing modules utilized bythe processor for predetermining a series of payout periods, wherein thenumber of years of each payout period is greater than one year, forpredetermining a maximum total withdrawal percent for each payoutperiod, and for calculating the amount of the benefit payment withdrawalfor each given year within a given payout period by receiving aninstruction from a relevant life that provides a withdrawal percent touse for each given year, the amount of the benefit payment withdrawalsdecreasing the contract value and thereby reducing the amount of fundssubject to investment control by a contract owner; and wherein the sumof the withdrawal percents from each given year within the payout periodis equal to or less than the predetermined maximum total withdrawalpercent that is allowed for withdrawal for the given payout periodwithout reduction of the payment base value.
 2. A system foradministering a deferred variable annuity contract during theaccumulation phase, the annuity contract having a payment base value, acontract value representing an amount of funds subject to investmentcontrol by a contract owner, and benefit payments, comprising: a storagedevice; a processor coupled to the storage device, the storage devicestoring modules utilized by the processor, the modules comprising: i. afirst module for receiving information from a contract owner in order toestablish a deferred variable annuity contract; ii a second module forreceiving benefit payment withdrawal requests from a relevant life, thebenefit payment withdrawals reducing the contract value and therebyreducing the amount of funds subject to investment control by thecontract owner; iii. a third module for predetermining a series ofpayout periods, wherein the number of years of each payout period isgreater than one year; iv. a fourth module for predetermining a maximumtotal withdrawal percent available for each payout period withoutreduction of the payment base value; and v. a fifth module forcalculating the amount of the benefit payment withdrawal for each givenyear within a given payout period.
 3. The data processing system ofclaim 2, wherein calculating the amount of the benefit paymentwithdrawal for each given year within a given payout period is performedafter receiving an instruction from the relevant life that provides awithdrawal percent to use for each given year.
 4. The data processingsystem of claim 2, wherein the sum of the withdrawal percents from eachgiven year within the payout period is equal to or less than thepredetermined maximum total withdrawal percent that is allowed for thegiven payout period without reduction of the payment base value.
 5. Acomputer implemented data processing method for administering a deferredvariable annuity contract during the accumulation phase, the annuitycontract having a payment base value, a contract value representing anamount of funds subject to investment control by a contract owner, andavailable benefit payments, said method comprising the steps of: a.determining by a processor the number of years of a first payout periodfor the benefit payments, wherein the number of years of the firstpayout period is greater than one year and storing the number of yearsin a memory device; b. determining by the processor a maximum totalwithdrawal percent for the first payout period; c. if requested by arelevant life, periodically calculating by the processor a benefitpayment withdrawal for the relevant life which decreases the contractvalue and thereby reduces the amount of funds subject to investmentcontrol by the contract owner; wherein the amounts of the benefitpayment withdrawals within the first payout period are determined inaccordance with an instruction from the relevant life wherein theamounts of the benefit payment withdrawals may differ for each givenyear within the first payout period; wherein if the sum of the amountsof the benefit payment withdrawals within the first payout period, asprovided by the relevant life's instruction, is equal to or less thanthe product of the maximum total withdrawal percent for the first payoutperiod and the payment base value, then the payment base value is notdecreased; and wherein the above steps are repeated by the processor atthe conclusion of each payout period.
 6. The computer implemented dataprocessing method of by claim 5, further comprising the step of:calculating a present payment base for said annuity contract; whereineach of the benefit payment withdrawals during a given payout period arecalculated using the following formula:((Payment Base)×(year X Withdrawal Percent), wherein (year X WithdrawalPercent) is selected by the relevant life); wherein X is the number ofyears of the given payout period; and wherein if [(year 1 WithdrawalPercent)+(year 2 Withdrawal Percent)+ . . . +(year X WithdrawalPercent)] is equal to or less than (maximum total Withdrawal Percent forthe given payout period), then the payment base value is not decreased,wherein (maximum total Withdrawal Percent for the given payout period)is predetermined by the company issuing the annuity product.
 7. Thecomputer implemented data processing method of claim 5, furthercomprising the step of: if requested by the relevant life, periodicallycalculating a withdrawal payment during a given payout period—that is inexcess of: (maximum total Withdrawal Percent for the given payoutperiod)×(Payment Base)—for the relevant life which decreases each of:the contract value and the payment base.
 8. The computer implementeddata processing method of claim 5, wherein the relevant life may notrequest a benefit payment withdrawal until after: (i) the expiration ofa moratorium period, which is measured from the issue date of thecontract; or (ii) the date the relevant life reaches age 60, whicheveris later.
 9. The computer implemented data processing method of claim 5,further comprising the step of: calculating a present payment base forsaid annuity contract; wherein each of benefit payment withdrawalsduring a given payout period are calculated using the followingformulas:((Payment Base)×(year 1 Withdrawal Percent), wherein (year 1 WithdrawalPercent) is selected by the relevant life); and((Payment Base)×(year 2 Withdrawal Percent) wherein (year 2 WithdrawalPercent) is selected by the relevant life).
 10. The computer implementeddata processing method of claim 5, further comprising the step ofpredetermining a yearly withdrawal percent chart that provides awithdrawal percent for each year of the relevant life's future age; andwherein the maximum total withdrawal percent for the given payout periodis calculated using the following formula:((predetermined yearly withdrawal percent at the first year of the givenpayout period according to the withdrawal percent chart)×(number ofyears of the given payout period)).
 11. The computer implemented dataprocessing method of claim 10, wherein the predetermined yearlywithdrawal percent chart is a function of the relevant life's age. 12.The computer implemented data processing method of claim 10, whereinonce the first benefit payment withdrawal is taken, the yearlypredetermined withdrawal percent is fixed for the remainder of thecontract.
 13. The computer implemented data processing method of claim10, wherein the yearly predetermined withdrawal percent increases at thebeginning of each subsequent payout period over the term of the annuity.14. The computer implemented data processing method of claim 10, whereinthe yearly predetermined withdrawal percent decreases at the beginningof each subsequent payout period over the term of the annuity.
 15. Thecomputer implemented data processing method of claim 10, wherein theyearly predetermined withdrawal percent fluctuates over the term of theannuity.
 16. The computer implemented data processing method of claim 5,wherein the benefit payment for a given year, if any, is paid inperiodic installments throughout the given year.
 17. The computerimplemented data processing method of claim 5, wherein the benefitpayment for a given year, if any, is paid in a single installment duringthe given year.
 18. The computer implemented data processing method ofclaim 5, wherein the benefit payment withdrawal for a given year, ifany, that is requested by the relevant life during the given year isless than the maximum available amount for that period.
 19. The computerimplemented data processing method of claim 5, wherein the number ofyears of the first payout period for the benefit payments is in therange of 2 to 20 years.
 20. The computer implemented data processingmethod of claim 5, wherein the number of years of the first payoutperiod for the benefit payments is in the range of 3 to 10 years. 21.The computer implemented data processing method of claim 5, wherein thenumber of years of the first payout period for the benefit payments is 5years.
 22. The computer implemented data processing method of claim 5,wherein the number of years of the first payout period for the Benefitpayments is the same as the number of years of each subsequent payoutperiod, if any.
 23. The computer implemented data processing method ofclaim 5, further comprising the step of: calculating a death benefit fora beneficiary upon the death of the relevant life, wherein the deathbenefit is the greater of: (a) a predetermined guaranteed death benefitamount; and (b) the present contract value.
 24. The computer implementeddata processing method of claim 5, wherein the guaranteed death benefitis paid to the beneficiary only if the relevant life dies during theaccumulation phase.
 25. The computer implemented data processing methodof claim 5, wherein if the contract value reaches a predeterminedminimum value, then the contract annuitizes and annuity paymentscommence.